While many are caught up in day-to-day price action, we saw some exciting developments announced for bitcoin during Consensus 2018, which led us to believe bitcoin remains materially undervalued.
One was from RSK. It’s an open-source, smart contract platform powered by bitcoin.
RSK works as a bitcoin sidechain. Bitcoin can be moved over to the RSK sidechain where it becomes “smart bitcoin” (SBTC), which runs the smart contracts.
There are many additional benefits to RSK:
- It’s backwards compatible with Ethereum. That means Ethereum smart contracts can be migrated to RSK. And Ethereum developers can benefit from the robustness and security of the bitcoin blockchain.
- It’s scalable. It can handle about 100 transactions per second (tps), roughly the same as PayPal. In the future, it plans to upgrade up to 20,000 tps.
- It’s fast. Average confirmation times are just 10 seconds, compared to 10 minutes for bitcoin.
Miners can mine both bitcoin and RSK at the same time, with the same hardware, and consuming the same electricity. It’s a win-win. RSK gets the security of the bitcoin blockchain, while bitcoin miners make extra income through the fees generated by RSK.
At Consensus 2018, RSK co-founder Gabriel Kurman announced that one in 10 bitcoin miners is now securing RSK. And a further 80% have committed to supporting the project in the future. So it’s getting the support of the bitcoin mining community.
The other project looking to improve bitcoin is the Lightning Network. It enables instant transactions and improves scalability by moving a majority of transactions off-chain.
At Consensus 2018, Blockstream engineer Christian Decker announced that each Lightning Network channel can potentially process up to 500 tps. That means once thousands of channels are up and running, the bandwidth of the bitcoin network could surpass other cryptocurrencies and even large payment systems like Visa.
Further, at Consensus, Microsoft announced that it’s working on a blockchain-based decentralized identity system. Tweets by Daniel Buchner, the lead developer of Decentralized Identity at Microsoft, confirm the use of bitcoin. That’s another positive for bitcoin and the Lightning Network.