Bitcoin Web3: Why Are Builders Building dApps on Bitcoin?

Building decentralized applications (dApps) on Bitcoin is now the go-to way for many builders in Web3. Thanks to protocols like Ordinals, Runes, and Layer 2s like Stacks, developers can now build all sorts of dApps on the pioneer network that they couldn’t before. 

What these dApps get from Bitcoin is a high level of security, immutability, global reach, decentralization, and more economic opportunities, creating Web3 built on Bitcoin. 

Read on to learn more about Bitcoin Web3 and why more and more devs are building dApps on Bitcoin. 

Can You (Really) Build dApps on Bitcoin? 

Yes, today developers can build a wide range of decentralized applications on Bitcoin. 

Examples of what is now possible to build on top of Bitcoin include fungible assets, non-fungible tokens (NFTs), DeFi platforms, Decentralized Autonomous Organizations (DAOs), bridge protocols, and even Bitcoin decentralized identities (DID).

How to Build Web3 on Bitcoin: Layer 1 vs. Layer 2

There are two main approaches to building dApps on Bitcoin: building on-chain and building on Layer 2.

Building On Chain

Building dApps on-chain refers to coding and launching an application directly on the Bitcoin blockchain. One way you can do this is to use a protocol like the Ordinals, which enables you to inscribe satoshis with metadata to create Bitcoin Ordinal NFTs and Bitcoin-native fungible assets like BRC-20 tokens.

By enabling developers to inscribe satoshis, launch Ordinals collections, etch and mint Runes tokens, and experiment with recursive inscriptions on Bitcoin, Ordinal Theory has started a revolution of sorts.

Building on Layer 2 Networks

For even more possibilities, devs can utilize Layer 2 protocols built on top of the Bitcoin blockchain. These platforms use off-chain processing throughput to improve the capacity of the ecosystem. 

dApps built on these L2s process most of their transactions off-chain and only have them secured on or by the main chain. This adds more use cases to the Bitcoin network.

One of the most popular L2s with developers is Stacks, which uses the Proof-of-Transfer (PoX) consensus mechanism and the Clarity programming language. On this platform, you can build a wide range of dApps, including NFT marketplaces, DeFi platforms, decentralized trading pools, and more.

Why Are More Developers Building Web3 on Bitcoin? 

There are lots of reasons why Bitcoin is so enticing to dApp developers. The list includes its security, decentralization, network stability, global reach, and high economic or market value.

Bitcoin’s Security 

The main reason why Bitcoin is a popular base chain for dApp building is its unparalleled track record of optimal security and resilience to tampering. This strength has been demonstrated for over a decade and comes from being maintained by a highly decentralized network of nodes and miners. 

Decentralization 

Speaking of Bitcoin’s decentralization, no single entity can ever exert control over the network, creating a trustless environment. Such a decentralized nature is important for dApps that prioritize censorship resistance and user sovereignty, making it natural for developers to want to leverage these benefits.

Network Stability 

The very simplicity of Bitcoin’s base layer contributes to its stability, resulting in no network downtime in the past decade. That makes the network an ideal choice for developers who wish to construct complex applications that require consistent uptime.

Global Reach & Liquidity 

Bitcoin’s global recognition and superior liquidity are other aspects that dApps developers find attractive. Its wide-reaching adoption means that dApps built there can tap into a vast user base and benefit from seamless value transfer across borders.

Economic Opportunity 

Finally, BTC’s limited supply of 21 million coins and the increasing demand as a result of the scarcity have made it achieve substantial and steady price growth. As many experts predict a continuation of the trend, those developing their dApps on it get a sense of security that their assets will continue to have value over time.

Building on Bitcoin vs Other Chains: What’s the Difference?

Here’s how building on Bitcoin (Layer 1 and Layer 2) compares to doing it on other popular blockchains, more specifically, Ethereum and Solana:

When deciding which blockchain to build on, there are some trade-offs to keep in mind. 

Though building on Bitcoin offers superior security and decentralization, these may come at the cost of programmability and speed, especially on Layer 1. By comparison, Ethereum and Solana may offer more tools and speed, but with higher centralization and stability challenges.

But all things considered, Web3 on Bitcoin is a natural option for anyone demanding longevity, trustlessness, and long-term stability for their work. This is particularly true with the implementation of Layer 2s, which now help bridge the flexibility and functionality gaps of Bitcoin’s code. 

Explore Bitcoin Web3 With Liquidium

Liquidium is a leading non-custodial Bitcoin Web3 lending platform that allows users to leverage their Bitcoin-based assets, such as Ordinals, Runes, and BRC-20, as collateral for safe and effortless peer-to-peer lending and borrowing.

A true DeFi protocol built and operating exclusively on the world’s most secure blockchain, Liquidium provides the necessary liquidity for users and HODLers alike to step into and make the best that BitcoinFi (BTCFi) has to offer. 

Access Liquidium today and explore Bitcoin Web3.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always do your own research before making any financial decisions.

FAQs

What is Web3 Bitcoin?

Web3 Bitcoin is the technology, community, and ecosystem of dApps and protocols on Bitcoin. It is also part of the Web3 that pertains to all-things Bitcoin-related, including the applications and services developed on its base layer (Layer 1) and Layer 2 solutions, such as DeFi platforms, NFTs, and many more.

Can you build on Bitcoin?

Absolutely. You can build dApps on Bitcoin, directly on the chain or through Layer 2 networks. In fact, with the introduction of Layer 2 protocols, more functionality has become available to the Web3 Bitcoin dApp building community via smart contracts and other tools.

How do you build on Bitcoin?

Creating dApps on the Bitcoin blockchain starts by choosing whether you want to do it on Layer 1 or Layer 2. Building directly on Bitcoin might be difficult due to the limited smart-contract functionality and slower transaction speeds. Layer 2s address this issue through a complex programming language or compatibility with the Ethereum Virtual Machine (EVM).

How to make a Bitcoin dApp?

To start making a Bitcoin dApp, you must first pick between building on Layer 1 (such as using Ordinals) or Layer 2 (like Stacks). Then, you need to employ appropriate programming languages and tools for the selected approach, conduct thorough testing, and provide continuous support and updates for your users.