Coming to a bull run near you: Ethereum Virtual Machine

Sounds gross, huh? That's exactly how I felt listening to Peter McCormack's latest 'What Bitcoin Did' episode about a DeFi project being built 'on' Bitcoin.

Now, don't get me wrong. I don't feel gross about DeFi (decentralized finance) itself. I'm open to the idea that DeFi is not only interesting and useful (theoretically) but is already operating on top of Bitcoin. Have you heard of a Discrete Log Contract (DLC)? This is a method of recording a contract on the Bitcoin blockchain that allows for a rudimentary agreement between two or more parties. The difference here is that most of the data and code are actually stored off-chain. Like the ethos in the Bitcoin development ecosystem, something like a DLC is designed to support the most decentralization, keeping the chain as simple as possible.

The project talked about on the show is called Botanix, and it features a separate 'side chain' called Spiderchain. This blockchain is connected to bitcoin by using multi-signature transactions to store bitcoin and allow users to use it as the base currency. Similar to Liquid, which using multi-signatures using a federation of signing parties. The main difference to Liquid is that the Spiderchain uses the Ethereum Virtual Machine (which is essentially an environment where code runs built in something similar to the JavaScript language) and therefore allows Ethereum developers, and apparently other blockchains like Solana, to basically 'copy and paste' the code into Spiderchain and run the application using bitcoin as the currency.

While I'm encouraged by the fact that they are not launching their own token - which is always a red flag - what irks and unsettles me about this conversation is the hubris of the guests, who proclaim that 'everything should exist on Bitcoin,' implying they were finally going to achieve what previous projects had failed to do. I also disagree with the notion that if you're skeptical about other blockchains and projects, you don't want the future of finance to be on Bitcoin. This binary representation of differing opinions overlooks the nuanced conversation we should be having.

Another concerning aspect was the engineer guest's repeated mention of being able to 'copy and paste' any Ethereum project into their Bitcoin-based project. To me, this sounded like they were essentially 'copying and pasting' the Liquid project and the Ethereum Virtual Machine, and just stacking them together. It sounds neither original nor interesting. In fact, it seems like an easier way for scam projects to use Bitcoin instead of another currency.

One crucial question Peter didn't ask—and I'm disappointed about this—is who is funding them. He questioned them on what the business model will be and the guest did talk about over 11 million in funding, but not on where the funding was coming from. This would have been a very interesting discussion point and a critical factor in evaluating a project like this. It's always useful to know where the money is coming from, what's the incentive, and where is the profit. This was not discussed.

The main takeaway for me is that Ethereum crypto bros and VCs are going to be all in on Bitcoin soon, and we'll see all of the existing scams in Ethereum, Solana, and other blockchains being 'copy and pasted' into the Bitcoin ecosystem. I'm not saying it's necessarily good or bad, but it does have a fishy smell to me.