Welcome
to
“Epoch
V”
of
Bitcoin.
On
April
20
Bitcoin
underwent
its
fourth
successful
halving,
the
programmed
slashing
of
the
amount
of
new
bitcoin
(BTC)
that
enters
into
circulation
via
mining.
While
the
event
itself
is
a
bit
of
a
barnburner
—
a
moment
for
people
around
the
world
to
celebrate
virtually
and
in
person
—
many
eyes
are
on
what
is
to
come.
This
is
an
excerpt
from
The
Node
newsletter,
a
daily
roundup
of
the
most
pivotal
crypto
news
on
CoinDesk
and
beyond.
You
can
subscribe
to
get
the
full
newsletter
here.
The
launch
of
Runes,
a
new
protocol
that
enables
the
creation
of
meme
coins
on
Bitcoin,
coincided
with
the
halving.
Already
hundreds
of
tokens
have
launched,
contributing
over
$80
million
in
fees
to
bitcoin
miners.
This
increased
trading
activity
has
also
driven
up
the
costs
associated
with
sending
a
transaction
on
Bitcoin,
with
the
current
average
price
over
$70,
an
increase
of
1,395.8%
over
the
trailing
30
day
average,
according
to
TokenTerminal.
While
it’s
hard
to
say
whether
this
activity
will
level
out,
there
are
some
who
think
“Epoch
V,”
or
the
period
of
time
leading
up
to
the
next
halving
in
2028,
will
be
when
Bitcoin
layer
2s
like
the
Lightning
Network
will
finally
catch
on.
On
April
20,
bitcoin
fees
hit
an
all-time
high
of
$128.
“Anything
that
causes
fee
rates
to
spike
will
probably
drive
people
to
seek
out
other
solutions,”
Bitcoin
Core
developer
Ava
Chow
said
in
an
interview
with
CoinDesk.
“Lightning
is
one
option.
Also
there
are
side
chains
like
Fedimint,
Ark
and
a
bunch
of
layer
2s.
High
fee
environments
will
prompt
people
to
look
into
them.”
It’s
a
point
echoed
by
a
recent
Messari
report,
which
argued
that
with
the
rising
level
of
on-chain
activity,
“layer-2
solutions
for
Bitcoin
are
not
just
a
luxury
but
a
necessity,”
analyst
Nikhil
Chaturvedi
wrote.
Bitcoin
is
no
longer
just
“digital
gold,”
but
a
platform
on
which
to
build.
This
shifting
mindset
was
stirred
by
the
launch
of
the
Ordinals
protocol
last
year,
which
enabled
new
ways
of
storing
data
on
the
smallest
units
of
BTC,
called
satoshis.
There
have
already
been
over
$3
billion
in
NFT-like
Ordinal
“inscription”
sales,
and
trading
activity
is
trending
up
with
the
average
number
of
transactions
approaching
2
million.
But
Ordinals
is
hardly
alone
in
driving
up
Bitcoin
fees.
BitVM,
a
way
to
move
computation
off-chain,
enables
people
to
build
Ethereum-like
smart
contracts
on
Bitcoin.
Babylon
is
building
a
way
to
stake
and
earn
yield
on
BTC
holdings.
And
layer
2s
like
Stacks
and
Merlin
are
becoming
home
to
a
number
of
decentralized
apps
and
meme
coins.
Interestly,
in
the
days
since
the
halving,
tokens
associated
with
Bitcoin
L2s
have
outperformed
BTC.
For
instance,
Elastos’
ELA
token
has
risen
11%,
and
SatoshiVM’s
SAVM
climbed
5%.
Stack’s
STX
token
has
gained
nearly
20%
to
$2.87
—
though
that
may
also
have
been
driven
by
the
network’s
anticipated
Nakamoto
upgrade,
which
began
rolling
out
today.
While
market
forces
will
likely
drive
action
to
Bitcoin’s
secondary
layers,
that
may
not
always
be
a
good
thing.
For
one
thing,
those
with
low
bitcoin
balances
may
be
priced
out
from
using
platforms
like
Lightning,
if
they
want
to
use
it
non-custodially
and
set
up
their
own
channels,
Chow
suggested.
“The
problem
is,
all
of
these
layer
2s
require
an
on-chain
transaction,”
Chow
said,
referring
to
something
like
the
“inbound
capacity”
needed
to
fund
a
Lightning
account.
Lightning
users
also
have
to
pay
for
an
on-chain
closing
transaction.
“In
a
high
fee
environment
that
means
it’s
going
to
be
a
little
bit
hard
to
actually
start
using
those
things.”
Of
course,
there
are
workarounds
to
this:
custodial
Lightning
companies
that
subsidize
these
surprisingly
expensive
transactions.
“I
am
concerned
higher
BTC
fees
will
drive
users
to
custodial
Lightning
services
…
giving
BTC
users
no
sovereignty
or
anonymity
over
their
BTC
holdings,”
pseudonymous
bitcoiner
and
Lightning
critic
Sovereign
Matt
told
CoinDesk.
“Custodial
Lightning
services
will
become
the
new
banks/middlemen
that
people
will
have
to
trust
with
their
life
savings
as
it
will
be
too
expensive
to
self-custody
and
transact
using
mainchain
bitcoin.”
To
some
extent,
all
of
this
is
downstream
of
the
so-called
Blocksize
Wars
over
how
to
scale
Bitcoin
years
ago,
where
it
was
decided
that
instead
of
ramping
up
the
size
of
Bitcoin
blocks
to
scale
the
chain
through
layer
2s.
That
set
Bitcoin
down
the
path
it’s
currently
on.
“There’s
basically
two
schools
of
thought
on
increasing
the
number
of
transactions
per
block.
You
can
make
blocks
bigger,
or
you
can
make
transactions
smaller,”
Chow
said,
adding
that
expanding
the
block
size
is
like
“brute
forcing”
a
solution.
There
are
ways
of
making
bitcoin
transactions
smaller,
and
more
compact,
but
until
that
happens,
it’s
like
layer
2s
will
grow.