The bitcoin price may be down from its all-time highs, but off-chain uses for bitcoin assets are in their own bull market.
We’re In A Bull Market For Off-Chain Bitcoin
It’s no secret that synthetic bitcoin products on other blockchains are often derided on Twitter and not universally used or welcomed by the broader Bitcoin community. But data shows that a non-trivial amount of bitcoin investors are increasingly using bitcoin-backed tokens.
So, are these products “good”? [...] Because becoming a reserve asset — of the global fiat economy or the internet-based “crypto” economy — is bitcoin’s most commonly accepted purpose, generally speaking, products that achieve this goal should be encouraged. Lightning pushes utility in the Bitcoin-native economy in the same way that tokenized bitcoin has a clear and direct effect on bitcoin serving as a form of reserve asset for non-Bitcoin-native sectors of the broader cryptocurrency market.
Albeit on a smaller scale, this is also somewhat the relationship between BYT and BLURT. The original concept was of BYT as a synthetic version of the underlying coin, with the added ability to earn passively - something not available on the Layer 1 coin. BYT has since diverged from this pure relationship, but it could also have done so by creating some third coin, such as pBYT as a pool of assets. Indeed, if BYT wanted to create further Layer 2 products, then it would be similar to the ideas expressed in the above article.
A reserve currency doesn't just sit there doing nothing. That "money makes money" is trite, as money does not procreate in the dark of night, nor does it undergo mitosis - it only makes a profit using contracts that are profitable. And this is something the pure HODLers cannot do with their Bitcoins in cold storage. Not everyone thinks HODLing is such a great idea.