Why Bitcoin's resurgence is more than just a narrative?
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Why Bitcoin's resurgence is more than just a narrative?
Bitcoin L2s seemed to gain attention "all of a sudden."
Navigating Web3 tides with focused insightsInterviewee: Dominik Harz, Co-founder of BOB
Interview and article: Wendy, Foresight News
Despite tensions with Bitcoin "purists," the rise of a new ecosystem around Bitcoin has become one of the undeniable trends in the fast-evolving crypto market.
At recent global industry events—including Token 2049, Consensus, and Foresight 2024—"Bitcoin's renaissance" has been a key topic of discussion. Perhaps the emergence of Ordinals, which attracted massive attention and participation, already foreshadowed more disruptive changes within the Bitcoin ecosystem—subsequent developments have shown that many Bitcoin-native projects began taking shape during this period.
Capital inflows are accelerating these transformations.
In March this year, Europe-based BOB (Buid on Bitcoin) announced $10 million in funding, aiming to launch the first Ethereum-compatible Bitcoin Layer 2. A sector once overlooked by investors—Bitcoin L2s—is not only emerging but also beginning to show signs of differentiated competition. Around the same time, Babylon, another project built on the Bitcoin ecosystem, announced $70 million in new funding.
The Bitcoin ecosystem seems to be getting “interesting.” But is the so-called “Bitcoin renaissance” merely narrative?
For Dominik Harz, co-founder of BOB, the answer is no.
“Bitcoin Renaissance” Is More Than Just Narrative
“The crypto market is largely driven by narratives. However, I believe there must be a very real foundation behind them. Bitcoin’s market cap is roughly three times that of Ethereum. Meanwhile, all innovation and new user adoption on Ethereum are concentrated in L2 solutions—Arbitrum and Base, for example, have excelled in this area. Therefore, if Bitcoin’s market cap is three times larger, then L2 solutions focused on Bitcoin should be at least three times bigger than Arbitrum and Base. This makes Bitcoin’s renaissance highly compelling.”
This was how Dominik Harz explained the logical basis of the “Bitcoin renaissance” in a recent interview with Foresight News.
Yet, these facts have existed for some time—why have investors only started shifting their stance in the past year or two? Even as co-founder of BOB, a notably watched Bitcoin L2 project, Dominik Harz finds it difficult to fully explain the shift in capital behavior.
It just seemed to happen… suddenly.
Bitcoin L2 Suddenly Gains Attention
“We started working on our (Bitcoin) L2 project back in August last year, but nobody really cared. Ordinals were still in early stages, Runes didn’t exist yet, and BRC-20 had just emerged. It wasn’t until February this year that people started paying real attention. For us, the pivotal moment was ETH Denver in March, where we hosted a 'Bitcoin Renaissance' event together with Babylon. Suddenly, everyone started noticing. Now there are various Bitcoin L2s popping up everywhere.”
But Dominik Harz admits, “It’s gotten a bit excessive.”
“Because you can’t verify anything directly on Bitcoin itself. That’s why we call ourselves a hybrid L2—we aim to eventually achieve verification on Bitcoin, but right now, verification happens on Ethereum.”
Different approaches to solving this native limitation—being unable to technically verify L2 transactions on Bitcoin—are now the key differentiator among competing Bitcoin L2 projects.
Competition and Opportunity Coexist—Seeking Breakthrough Amid Controversy
“You have to make trade-offs in how to handle this current constraint. One option is to wait for mainnet activation—to wait for a functional BitVM version or an OP-CAT merge. But we don’t want to wait. We want to build on Bitcoin now. So we asked: what’s the next safest thing we can do today? That’s why we decided to launch BOB as an OP Stack rollup on Ethereum. Right now, we share the same security assumptions as Base, Arbitrum, or Optimism. We think this is a reasonable compromise from a security standpoint. Our approach is very pragmatic. We’re already live on mainnet, building the ecosystem. Our biggest focus now is launching usable applications that unlock new use cases on Bitcoin.”
Finding new use cases is a shared challenge across all Bitcoin L2s—and indeed, all L2s. Building new types of applications on Bitcoin’s native system “might run into issues due to UTXO model constraints, and transactions on Bitcoin can be quite expensive.” Another common challenge nearly every L2 faces is creating a user-friendly experience. Currently, BOB uses account abstraction to automate all backend operations, allowing users to sign up via email or Telegram accounts on the frontend without needing to create a wallet.
On one hand, Bitcoin’s massive market presence offers enormous potential for Bitcoin-based L2 development. “We believe Bitcoin is the best place to build a foundational new financial system—it’s the most resilient part of the entire crypto ecosystem. That’s why we want to build this new ecosystem on Bitcoin, rather than developing L2s on Ethereum, Solana, or other chains.”
“Compared to Solana or Ethereum, the Bitcoin community focuses on delivering real-world use cases for real people. What BOB aims to do is support this vision and bring more people in. By providing better tools for builders, they can create more interesting applications. By building more accessible tools, onboarding becomes easier. For example, maybe people don’t want to manage their own seed phrases. Maybe signing up via email, Google, Apple, Facebook, or social accounts is a way to onboard large numbers of people—a temporary solution until they understand crypto well enough to self-custody. There are already good tools in this space, but Bitcoin assets should remain the stable core. Then, users could borrow stablecoins against their Bitcoin to hedge volatility—for instance, using Bitcoin as collateral to finance a car loan. We should focus on real-world use cases that persist even when no one is paying attention to crypto. When all the meme coins collapse in a bear market, we want there to still be practical use cases—and we believe those will revolve around Bitcoin.”
On the other hand, beyond finding new use cases and delivering secure, seamless user experiences, Bitcoin’s ecosystem development faces another unique challenge: confronting another powerful voice within the Bitcoin community—perhaps a distinct hurdle that Bitcoin L2 projects face compared to Ethereum or other decentralized network L2s.
Yet, in Dominik Harz’s view, “this is a healthy debate,” and “one of Bitcoin’s core values is its resilience and extremely cautious approach to functionality. But at the same time, I believe innovation is also crucial.”
“BOB’s positioning is clear: we can build a Bitcoin L2 and do interesting development on top—interact with Ordinals, interact with the Bitcoin chain—without changing Bitcoin itself. That’s also why we’re pushing for merged mining, to provide miners with additional revenue streams, because we want to keep Bitcoin vibrant and give back to the Bitcoin community. Likewise, that’s why we support BitVM—it doesn’t require changing Bitcoin’s opcode structure.”
“I think there will eventually be room to change Bitcoin itself, especially if we can develop a ZK-based technical solution built on the Bitcoin network,” Dominik Harz told Foresight News. “That would be incredibly powerful—enabling a stronger security model.”
For now, Bitcoin L2 development remains in a “relatively early stage”—it’s a very new concept that hasn’t yet gained sufficient momentum. But from a founder’s perspective, this also means ‘it’s a completely new market full of opportunities.’
“There are many different approaches to building Bitcoin L2s—we’re an Optimism-style rollup, others are building ZK rollups. Some sidechains aren’t well-integrated with Bitcoin yet. This is great for Bitcoin users, as different companies compete for market share and push forward underlying technological upgrades. I expect that within the next one or two years, several projects will emerge as leaders in this space and drive it forward.”
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