BitMEX Explains Why Ethereum Has More Dapps Than Bitcoin – CryptoPotato

BitMEX Research recently published a report detailing why Ethereum has dwarfed Bitcoin as the center of Dapp and developer activity within crypto. While there are technical reasons for the discrepancy, the team claims that Bitcoin developer culture prior to Ethereums launch drove alternative use cases away from its ecosystem.

The report explores online discussions from March 2014 among Bitcoin Core developers pertaining to Bitcoins application layer. They began with the launch of the Counterparty protocol early that year a layer 2 solution for creating new tokens and trading them on a distributed exchange.

Counterparty uses OP_Return to store data a type of transaction output that is provably unspendable. The function can be used to burn Bitcoin or store arbitrary data in the Bitcoin blockchain, explained BitMEX.

Some say these types of transactions help to scale Bitcoin, as they do not require pruned Bitcoin nodes to store their data. This makes running a node less storage intensive for the average person, helping Bitcoin retain its decentralization.

Nevertheless, on March 20th, 2014, Bitcoin contributor Jeff Garzik began criticizing CounterPartys use of Bitcoin blockchain space in a Bitcointalk forum. He argued that the functions storage of arbitrary data in the blockchain could have negative or unintended consequences and that more efficient scaling solutions such as sidechains already existed.

In a quick back and forth, Counterparty developers ultimately agreed with Garziks stance. They asked to discuss solutions with Bitcoin core developers on how Counterparty can survive while utilizing the security of Bitcoins blockchain in a responsible manner.

However, Bitcoiners did little to support the lesser protocol. Instead, a Bitcoin dev and mining pool operator at the time named Luke-Jr accused Counterparty users of forcing Bitcoin nodes to store unexpected transaction types against their will. Like Garzik, he recommended merge-mined sidechains as a place for such alternative uses of blockchain data.

Hopefully as mining returns to being decentralized, we will see less toleration of abusive/spam transactions whether the OP_RETURN variant or otherwise, he concluded.

Backing up his statement, Luke-Jr then began censoring all Counterparty-related transactions at his mining pool. On March 28th, he then compared Counterpartys use of blockchain space to abuse against Bitcoin nodes.

Luke-Jrs statement and actions drew anger from many members of the Counterparty community. Their counter-arguments centered around Luke-Jrs seeming attempt to dictate what the Bitcoin blockchain was meant to be used for. I cant believe this attitude, said one user. I didnt know bitcoin had owners.

Others argued that Counterpartys transactions constituted financial transactions and therefore were in line with what Bitcoin nodes agreed to store. You have a much narrower view of the possible use cases for Bitcoin than do others, said Counterparty co-founder PhantomPhreak.

Bitcoin does lots of things that it was not originally intended to do, he continued. We dont want to extend the Bitcoin protocol. We want to do something entirely within it, and as simply and directly as possible, for the benefits of stability, security, etc..

Based on the overwhelming reaction from Counterpartys community, BitMEX suspects that this moment drove many developers away from Bitcoin to develop their projects on Ethereum.

As BitMEX elaborates, sidechains had failed to gain critical mass as a scaling solution for Bitcoin due to various limitations of the technology despite support from Counterpartys opponents.

One of these limitations involved the complexity of building such a sidechain. Developers simply did not have time to build a secure, merge-mined sidechain before other protocols won market share. Though sidechains like Rootstock and Liquid now exist, they are still dwarfed by Ethereum in popularity.

A second constraint surrounds the use of Bitcoin as a native asset on each chain while remaining pegged to the main Bitcoin chain. To this day, developers are yet to find a solution for building a fully trustless two-way peg between blockchains. In January, Ethereum co-founder Vitalik Buterin wrote a Reddit post on why he believes the security of blockchain bridges is fundamentally flawed.

Finally, sidechains are thought to have limited use cases that dont ultimately require security guarantees from the main chain. Therefore, sidechains may not fully solve Bitcoins data storage issues, depending on the application.

It seems that some of the people arguing in favor of sidechains as a solution was not particularly interested in many of the Dapp applications nor had they experimented with them, stated BitMEX.

Ethereum also holds properties that make it more developer and user-friendly, such as faster block times, a less conservative blocksize constraint, and a more flexible scripting language.

However the most significant factor is culture, concluded the report.

Late last month, the popular crypto venture capitalist and researcher Nic Carter wrote a scathing essay against Bitcoiners who denied alternative use-cases for blockchains, such as stablecoins and decentralized finance.

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BitMEX Explains Why Ethereum Has More Dapps Than Bitcoin - CryptoPotato