Hong Kong welcomed the first Bitcoin Asia conference on May 9, 2024, marking a new milestone for the Asian Web3 industry. The thriving Bitcoin ecosystem owes much of its success to the Asian market, which includes developers and projects in the region. This is why Bitcoin Asia chose Hong Kong as its inaugural location this year. The conference focused on discussing the macro Bitcoin ecosystem and the current state and future development of Layer 2 technologies, all centered around the financial attributes and transactions of Bitcoin. The event brought together project teams, mining manufacturers, wallets, ETF exhibitors, exchanges, and other participants. From my observation, there were over 1,500 attendees over the course of two days, including key contributors from various sectors of the Bitcoin ecosystem.
Here are some key insights and personal reflections I gained from the conference:
Conference Focus:
The core of this conference revolved around showcasing and discussing the Bitcoin ecosystem, particularly new tools and platforms aimed at optimizing trading strategies and improving transaction efficiency. Some of these projects focused on development from a Layer 2 perspective, while others tackled issues from the native chain angle. The main focus was on addressing the core pain points of the Bitcoin network: scalability, security, and smart contracts.
Infrastructure Development Challenges:
I noticed that many startup projects in the Bitcoin ecosystem are currently concentrated on building infrastructure. These projects are crucial for improving transaction speed, ensuring transaction security, and enabling network scalability. While they face funding and technological challenges, their importance cannot be underestimated. The presence of numerous wallet exhibitors in the exhibition area also highlighted the difference in stages between the Bitcoin and Ethereum ecosystems. For Bitcoin’s true development, a stronger emphasis on infrastructure is necessary.
The Rise of Layer 2:
Layer 2 projects were a prominent theme at the conference, showcasing how new layers built on top of the Bitcoin protocol can solve scalability issues. The development of such technologies not only represents the forefront of blockchain exploration but also has the potential to lead the Bitcoin network towards a more efficient and scalable future. Two notable projects that garnered much discussion were Merlin Chain and Dovi. Merlin Chain, through its MERL token, provides governance functionality and plays a key role in the ecosystem. It highlights compatibility with the Ethereum Virtual Machine (EVM), enabling seamless interaction with Ethereum-based decentralized applications (dApps), thereby increasing its attractiveness and usability within the broader crypto ecosystem. Dovi is a community-driven Bitcoin Layer 2 solution that integrates EVM to provide a scalable, efficient, and secure smart contract platform. Dovi supports various asset types, including BRC-20 and ARC-20 tokens, enabling fast and secure cross-chain asset transfers.
Although Layer 2 technologies have high potential in theory, I believe they have yet to fully address some concerns of investors, especially those who prioritize security and stability. Perhaps these conservative individuals need entrepreneurs to explore more direct solutions from a native chain perspective. For the development of applications on Layer 2, especially applications like GameFi, I believe it is still premature. These applications still face many infrastructure challenges that need to be addressed, such as improving transaction speed and processing capability, which require more technological innovation and market validation.
On the other hand, technology-focused projects with a focus on the entire chain have already matured solutions to address cross-chain interoperability, compatibility, and efficiency. For example, Zetachain, which has recently gained significant attention and is listed on Coinbase exchange, simplifies interactions between different blockchain networks by providing cross-chain interoperability, enabling a more efficient and convenient blockchain ecosystem. ZetaChain allows assets and information to flow between different blockchain networks, solving the current problem of blockchain fragmentation. Users can seamlessly transfer assets and data between different blockchains without relying on intermediaries. Zetachain is already compatible with multiple mainstream blockchains, including Ethereum, Bitcoin, and Polkadot, providing extensive support to meet the needs of different users.
Interacting with Bitcoin Holders:
In my conversations with some Bitcoin holders, I found that they can generally be divided into two mindsets. One is more conservative, preferring to hold Bitcoin long-term to enjoy its appreciation over time and passively earn income by befriending time. The other mindset is more willing to actively invest in supporting Bitcoin infrastructure and new projects to promote the ecosystem’s vibrant development. In a conversation with one Bitcoin holder, he mentioned the Babylon project. He stated that if Babylon can truly achieve its technological goals, he may change his conservative stance to a more aggressive one, considering that he has earned a significant amount of money during DeFi Summer, and fixed income assets like Lido are also favored by traditional investors for asset appreciation.
However, he may not be aware that there is already a project called ZKM (zkm.io) that allows the sharing of native assets without additional security assumptions. It combines zero-knowledge proofs (ZKP) and MIPS architecture to achieve efficient computation while protecting privacy. Its Entangled Rollup can verify and relay consensus from different blockchains without additional consensus assumptions. Moreover, through their zkVM-integrated blockchains, interoperability and local liquidity can flow between different ecosystems.
Bitcoin Asia Preceded by Forked Event:
During the Forked event preceding Bitcoin Asia, DePIN and AI remained popular topics. Forked is a non-Bitcoin ecosystem event that focuses on discussions about the possibilities of DePIN and AI in the future development of Web3. These discussions showcased the high level of interest and investment enthusiasm in these areas from different markets. Particularly in terms of participation, the number of attendees at Forked exceeded that of other Bitcoin ecosystem-focused peripheral events.
Conclusion:
I would like to express my gratitude to our portfolio for the invitation, and DFG, as our own portfolio’s partner, participated in the Hong Kong event week and experienced the flourishing Bitcoin ecosystem. The rise of the Bitcoin ecosystem and the listing of Bitcoin ETFs in multiple regions undoubtedly benefit the entire crypto industry. I hope to see more technological breakthroughs and the birth of great projects in the days to come.
About DFG:
Digital Finance Group (DFG) is a global blockchain and cryptocurrency investment company founded in 2015, with over $1 billion in assets under management. Its investment portfolio covers various tracks of the blockchain ecosystem, such as Web3.0, CeFi, DeFi, NFTs, and the Polkadot ecosystem.
Investments include Circle, Ledger, Coinlist, FV Bank, Astar, ChainSafe, and over 100 other companies. DFG aims to create value by analyzing and researching the most influential and promising global blockchain and Web3.0 projects, which will bring fundamental changes to the world.
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