As excitement around Bitcoin returns, a growing number of builders are looking to deliver functionality to the chain that has never existed before.

For years, Ethereum has boasted smart contract functionality that has enabled decentralized finance and non-fungible tokens to thrive. This year, more of that has been built on Bitcoin than ever before.

In a recent discussion, Roundtable anchor Rob Nelson caught up with Bitlayer Co-founder Charlie Hu to explore how the company is one among many looking to mix advanced financial functionalities with bitcoin's security. This innovation could transform bitcoin from a static asset to a versatile financial tool.

Nelson began by clarifying the foundational concepts of layer one and layer two solutions. He explained that while Bitcoin and Ethereum are both layer one chains, Ethereum has traditionally been the platform for building various utilities and transactional capabilities.

Hu, emphasizing the unique advantages of Bitcoin, highlighted the significance of finality in transactions. "Bitcoin's security is unparalleled," he stated. "It's the most decentralized and tamper-proof network in the world." He explained that finality ensures transactions are conclusively settled on the Bitcoin layer-one network, thus inheriting Bitcoin's robust security features.

The discussion shifted to the practical applications of Bitlayer's technology. Hu elaborated on the potential for decentralized finance (DeFi) on bitcoin, including lending, staking, and trading. "Bitcoin can now support a variety of financial services thanks to our layer-two solutions," he said. This development promises to transform bitcoin from a mere store of value into a versatile financial tool.

Nelson probed further, asking about the practical impact of these innovations. Hu mentioned Bitlayer's recent achievements, including attracting investment from Franklin Templeton and reaching over $600 million in total value locked (TVL) on their platform. This traction, he argued, is a testament to the viability of their approach and the growing interest from traditional financial institutions.

One of the most compelling aspects of Bitlayer's vision is the potential for bitcoin holders to generate yield on their assets. Hu pointed out that for the past 15 years, bitcoin has not offered yield-bearing opportunities. With Bitlayer's technology, users can now stake their bitcoin and participate in on-chain financial products, creating new avenues for earning passive income.

The concept of bitcoin as both a digital gold and a technology was also explored. Nelson drew a parallel between bitcoin and gold, noting that while bitcoin has served as a store of value, it is also a technological platform with untapped potential. Hu agreed, adding that the introduction of yield-bearing opportunities could significantly enhance bitcoin's appeal to investors who have historically viewed it as a static asset.