Stacks co-founder believes layer 2 will drive adoption for 2nd phase of Bitcoin

Muneeb Ali, co-founder of Stacks, shared his perspective on the rapid shift towards a diverse and active phase of innovation within the Bitcoin ecosystem.

Ali highlighted a notable shift in the challenges faced by Stacks within the Bitcoin ecosystem, with an increased focus on creativity and solution diversity at a panel during Dubai’s Token2049 event

“The biggest problem with Bitcoin right now is that there’s so many different, like L2s and protocols,” Ali began, referencing a recent tweet by Kyle Smani of Multicoin. The Stacks co-founder emphasized this as a positive shift from previous perceptions that nobody ever wanted to build on Bitcoin (BTC).

Ali described the current phase as Bitcoin season two, indicative of a mature, bustling free market where developers actively engage with the platform.

Ali conveyed optimism for the Bitcoin ecosystem, noting that multiple solutions — potentially over 2,000 — are proposed when developers are encouraged to innovate. Although not all will succeed, the diversity of approaches is a positive sign of the ecosystem’s vitality and creativity.

He pointed out the low percentage of capital currently deployed in the market because investors don’t want to spend Layer 1 Bitcoin, seeing it as an indicator of the nascent stage of Layer 2 development.

“Depending on the market price of $1.2 trillion in capital, less than 1% of L2s right now are actually deployed. So we are at a very, very early stage and I would like to see that number move to 1%, 5%, 10% at some point.”

Muneeb Ali

Furthermore, Ali addressed the technical and infrastructural hurdles Bitcoin faces, particularly in terms of transaction mechanics. He expressed how the Lightning network did not accomplish what it meant to do and had hope for improvements that would simplify Bitcoin transactions, making them as easy and efficient as modern payment systems.

Ali questioned the possibility of achieving extremely fast and cost-effective Bitcoin transactions on Layer 2 networks, highlighting this as a vital area for development to improve user experience and extend Bitcoin’s appeal.