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On February 1st, the Binance Web3 wallet has launched the Inscription market, allowing users to manage their BRC-20 assets. As of now, market feedback indicates a somewhat lackluster performance. However, the competition within the Bitcoin ecosystem in 2024 is destined to become a long narrative among major institutions such as Binance and OKX.
Simultaneously, some users have keenly observed that the Binance Inscription section appears to use sats as the pricing unit, as shown in the above image. The values are displayed in equivalent currencies such as Chinese Yuan (CNY) at the top, and in "sats" at the bottom. For example, in the first payment option, 16200 represents "16200 sats," with the market price at approximately 48.88 CNY.
So, is this really the "SATS" associated with Inscription, and what does it signify?
What is "Sats"?
Firstly, it's important to clarify that here, "sats" does not refer to the Inscription token SATS. The sats displayed in the Binance Web3 wallet essentially refer to "Satoshi":
"Satoshi" is the smallest basic unit of Bitcoin denomination (Satoshi, abbreviated SAT). 1 Bitcoin equals 100 million Satoshis, meaning 1 Satoshi (SAT) equals 0.00000001 BTC.
Advantages in Pricing for Payment and Transfer Scenarios
"Sats" have existed since at least 2011, but previously, due to factors like the relatively low unit price of Bitcoin, it did not receive mainstream attention. Now, with the price of Bitcoin reaching tens of thousands of dollars per coin, the significance of "sats" compared to direct "BTC" pricing becomes apparent in payment and transfer scenarios.
For instance, if the market price is $40,000, and 1 USD is 0.000025 BTC, it can become cumbersome for practical payment and transfer calculations. However, if priced in "sats," where 1 USD equals 2500 SAT, it becomes much more convenient for both payment transfers and record-keeping, making it suitable for pricing in small transfers and payment scenarios.
Jesse Xiong, a corporate representative from JPMorgan, shares a similar perspective. He openly expressed that the growing popularity of "sats" is because it is simpler to record transactions in this unit, as dealing with a string of decimals can be quite daunting.
Reducing the "Psychological Threshold" in Trading
Beyond the advantage of user understanding in payment and transfer scenarios, "sats" can also reduce the psychological threshold for incremental users in trading.
In traditional financial markets, if the value of a single stock is relatively high, a company might decide to split the stock to attract more ordinary investors, reducing their purchase and psychological thresholds. This is similar to Tesla's previous stock split plan, which gave many ordinary investors the opportunity to participate (reducing the price from several thousand dollars per share to only a few hundred dollars per share).
The same principle applies to high-priced Bitcoin. Although cryptocurrency purchases do not have the same minimum restrictions as stocks, low-priced meme coins like Dogecoin often have a greater psychological appeal to ordinary investors—appearing cheaper and more cost-effective.
Recently, some cryptocurrency trading platforms announced the introduction of "sats" trading mode for all Bitcoin transactions. Users can choose to trade BTC in SAT units, where, for example, under the "sats" trading mode, BTC/USD is displayed as SAT/USD, and ETH/BTC is displayed as ETH/SAT.
While the latter is more of a psychological influence, the former, using "sats" as the unit for small, fast Bitcoin payments and transfers, could be crucial for the next phase of Bitcoin's development—potentially becoming a key factor in re-establishing Bitcoin's "global currency" attribute in the payment domain.
Especially with the backdrop of the approval of the Bitcoin ETF in 2024, the asset attribute of Bitcoin as "digital gold" has subtly surpassed its payment attribute as a "global currency."
Under the new development momentum of BTC Layer2, "Sats Payment" may be at a turning point.
For Bitcoin, which can only handle 7 transactions per second, achieving instant payments in the retail scene with small amounts, high frequency, and speed has been a major pain point in its vision of being the "global payment currency." The Lightning Network, introduced in March 2018, is the primary solution for strengthening Bitcoin's payment attributes.
However, the development of the Lightning Network has not been very satisfactory in the two years from 2019 to 2020. Its overall growth was slow, and it was even overshadowed by ERC20 Bitcoins (such as WBTC) after the start of DeFi Summer, leading many who had high hopes for the Lightning Network to gradually lose interest.
Since 2023, especially in the last six months, Bitcoin's Layer2 solutions have seen an unnoticed explosion. Besides well-known projects like Stacks, RSK, and Liquid, new solutions like BitVM and BEVM have provided fresh perspectives.
The advantages of Bitcoin L2 compared to others have become apparent. By bundling transactions onto L2, it solves the problems of network congestion and "junk transactions." Additionally, with the programmability of smart contracts, it creates a series of DeFi application scenarios for the Bitcoin ecosystem, including swaps, lending, liquidity mining, and staking.
Taking BEVM as an example, it is a BTC Layer2 that uses BTC as gas and is compatible with EVM. Its core goal is to expand the smart contract scene for Bitcoin, helping BTC overcome the constraints of being a non-Turing complete blockchain that does not support smart contracts. This enables BTC to build decentralized applications (DApps) on BEVM as a Layer2 with BTC as the native gas.
This means that all transactions are moved from the Bitcoin main chain to run on the Layer2 network. Since BEVM is fully compatible with EVM, it also allows BTC to easily implement various decentralized applications, empowering Bitcoin ecosystem sub-projects on L2.
Developers of Ethereum DApps can seamlessly migrate to BEVM and quickly build on-chain DeFi scenarios such as swaps, lending, liquidity staking, making it more decentralized and convenient than the previous two.
Moreover, unexpected progress between institutions and countries may be the biggest boost. On February 1st, Felix Ulloa, the Vice President of El Salvador, once again confirmed that Bitcoin would remain the legal tender of El Salvador during President Nayib Bukele's second term.
"Sats" + Bitcoin L2 marks the beginning of a new era for Bitcoin payment attributes!
Looking at it this way, with the continuous development of "Sats" in Bitcoin L2, it has the potential to become the basic unit of account for the next phase of Bitcoin.
If the entire industry adopts satoshi as the pricing unit, it will become a very important component of the Bitcoin blockchain.
Especially in conjunction with the successive launch and ecosystem construction of Bitcoin Layer2 solutions like BEVM in 2024, leveraging the performance and cost advantages of L2 could restore Bitcoin's position as a "global currency," making it more advantageous in competition with the positioning of "digital gold."
In 2024, combined with the development of Bitcoin L2, it may be the year when "Sats" gradually becomes the basic unit of account for the next phase of Bitcoin and the beginning of the return of Bitcoin's payment attributes to the center stage as a global currency. |
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Post time 18-2-2024 15:27:38