The protocol is presented by the Stellar Community Fund Accelerate your Web three project with stellar funding. As 2023 comes to an end, we're taking a closer look at some of the Blockchain tech predictions for 2024. Joining me now to discuss is Coin Desk's managing editor of Tech and protocols, Brad Cow Brad. Welcome. Thanks Jim. All right. As I think about 2023 I think about ZK proofs.
I think about account abstraction, talk to me about what all of the tech experts you spoke to throughout 2023 are looking forward to next year. It's been su super interesting year, Jan and yes, you're right. We're looking at a definitely a very interesting year coming next year. And you know, of course, the there's the big Bitcoin having, but there's all sorts of stuff that's also happening on Ethereum. And this year we've seen this explosion of layer two networks that was kind of the big story next year. And um and we also saw what's known as the emergence of. Um well, we, we saw a real percolating in ZK tech which is zero knowledge cryptography.
There's a, there's something called zero knowledge proofs. They've been around a long time, but they're really starting to get incorporated into Blockchain tech and developers are really playing around with them and learning all sorts of new uses for those. So that's one of the things we're looking for. Um And uh there's, you know, I could go into detail on that if you want. Yeah, I want to get into detail on Zero knowledge in just a bit. But let's start with the Ethereum ecosystem which of course switched to proof of stake in 2023.
That was a huge development. It paved the way for much more. What is the Ethereum ecosystem looking forward to next year? Well, more of the same. I mean, I have uh spoken with one source. Uh Actually our former colleague, Galen Moore at Axel R. Uh He told me that they, uh this year we've seen dozens, you know, te tens, first of just a few of these layer two networks. And then now there's like dozens of them. He says they're gearing up for hundreds or even thousands of these layer two blockchains.
Everybody started one. You know, this year is such a huge deal that Coinbase started its own layer two. But it's like every, everybody's gonna have a layer two is kind of their idea. And so, uh how do you make that work? Is one question, uh how does it all work together? You know, there's a topic called interoperability that's become a huge deal. Well, Brad maybe you can unpack this for us uh from your reporting. Like do we need so many layer twos? You talk about thousands of layer twos Coinbase, of course launched there as I believe Kraken has one in the works. Do we need so many layer twos? Are these gonna be separate islands doing their own things that eventually are going to be connected and interoperable? But then of course, when we talk about interoperability, there's this big security issue.
So talk to me about what that future looks like and how all of these layer twos might work together. Well, that is the question, you know, I, I did talk to Steven Gold Fetter uh who, who kind of runs off chain labs uh which is the big developer for Arbitra, which is the number one layer two. And he told me it's, it's like, I think 1000 bucks a day or something like that just to run later or two, but that is like kind of under the old standards, they're building a new, you know, they're, they're always trying to take it a step further. So it's super easy to run it. Uh It's super easy to spin it up. So you kind of reduce those costs. And then I was just reading there's a new technology called Retaking that we talked, we wrote about a lot, a lot this year, which is basically taking all of the theorems staking tokens and using those and retaking those to provide security for additional protocols. And that could also bring down the cost of kind of running your own layer two. And do you need like a full layer two or do you need a light layer two?
You know, but also there may be some marketing people want to get out there, they want to make sure they don't get left behind, they want to have a layer two just to make sure they have one. or maybe it's part of their pr like, hey, we've got a layer two. There's all sorts of reasons. But you know, the big idea is the customizability. I did say that word, customizability, you can customize if you have your own layer to it, you can get it exactly the way you want. You know, it's like if some people build their own P CS, you know, it's because they want exactly the right thing. That's part of the concept. Yeah, retaking is really interesting on our last protocol segment.
We spoke to Shriram Kanan from Eigen Layer and it's, it's been very popular. I think they have 450,000 E raked and they are pausing at 500,000. So I think that that is definitely going to be um a narrative that continues into 2024 Brad. We're going on a journey though, we're going to get to ZK proof, but I want to go from Ethereum to Bitcoin and talk about ordinal smart contracts on the Bitcoin Blockchain. Uh How, how are you expecting to see that develop in 2024? What are folks saying? I mean, this is really become such a fascinating story. I mean, the, the big idea that we learned this year is that Bitcoin can do way more than just payments.
You know, if, if it was set up as a, as a peer to peer payments uh network. And um you know, now we now we can do NF DS, we can do tokens, you know, smart contracts. And they also, you know, a lot of the, a lot of the things that have been major on Ethereum are now getting imported on to Bitcoin. So um well, layer twos, you know, I mean, I don't know if that's an Ethereum native concept, but I mean, you know, Ethereum is taking it to the next level, but Bitcoin, you know, that they, that's like a big priority for them is the layer twos. Um But OK, ordinals, you know, I mean, these things are on fire. I wrote about an auction at Sotheby's last year. There were these Bitcoins rooms, there are three, you know, they were like Super Mario character, you know, artistic, you know, pseudo meta representations.
One of them was a pixelated avocado. But, you know, one of these things sold for more than 200 grand at Sotheby's, I mean, it really is just exactly like the NFT hysteria that we saw. But on the other hand, you know, the Bitcoins are super upset that it's, it's clogging up the network because they're so popular. And um so that's setting up a real potentially battle in 2024 for kind of like the soul of Bitcoin. And how do they resolve that technologically? Uh And are, you know, can certain actors decide what is spam on the Bitcoin Blockchain or is it, is it like let the market decide?
Right now, it seems like they let the market decide perspective is kind of winning. So if some of these purists want to just keep it pure, they may have to do some kind of a fork that would be super interesting. Uh But, you know, people are taking these ordinals to the next level, there's no signs of them stopping, they just drove Bitcoin fees to an all time high, uh like over the past week. And so, you know, that's a real change in, in, in, in kind of the mentality of your building on Bitcoin Brad, I went to a Bitcoin meet up recently and there was a lot of talk about the potential for one that could mean I went to PUB key for the very first time, my first time at PUB key and a Bitcoin meet up and there's a lot of talk about a fork, but I think that it's about time the Blockchain, the Bitcoin. Blockchain had a little fun.
And so I don't mind the pigs made a, and mushrooms. Yeah. No, I mean, II, I go to the one here in Austin, which is amazing gathering every, every month. Um, in fact, there's one tonight but I can't go because I have to get ready for a vacation. But, um, no, it's, it's, uh, but, yeah, it's, the, the video opinions are split on this topic. It's true. And I think that we will continue to talk about those split opinions as we move through uh 2024. But here's our full circle moment back to the ZK proofs. I know you wrote about uh VC firm A 16 Z weighing in on ZK proofs recently, talk to us about the conversation that's happening there. I mean, you know, we were joking, this gets super complicated, super fast, but, you know, at the broadest level, you have these ZK proofs and um you can do a lot with them.
There's a lot of uses for them. Um I mean, the big idea is that, you know, I mean, a 16 Z, the crypto VC firm, they put this in their 2024 predictions list which we highlighted, um you know, they are talking about snarks, which is a specific type of ZK a proof called the succinct non interactive arguments of knowledge. I said that um and you know, the idea is they, they can just reduce the uh or increase the amount of work. Uh that kind of a lower power computer can get done. You know, you can, you can do things with ZK proofs on a, with less computing power. Um That just makes it possible, you know, it's kind of like the idea of, of uh room temperature superconducting, you know, you get it to a certain level and all of a sudden you can do all kinds of things and they're talking about, you know, the, the internet of things where everything is connected to the internet. But a lot of people think that that will be done via Blockchain, you know.
But they're saying it, it, it could have applications in the internet of things, media editing software, uh with authenticity, uh remixed memes could pay homage to initial sources, llm inferences. So they're talking about, you know, use can be used in A I um you know, for, for proving authenticity, you know, proof of, you know, it's kind of like the big world quid thing. It's like proof of humanity. Um I don't think, I don't know if they're using the ZK but um you know, there, there uh there's so much you can do, you know, self verifying IRS forms was mentioned by a 16 Z un Forge bank audits. Um You know, so uh the big idea here is that ZK really burst onto the scene here in terms of making it into the, you know, coin desk headlines in 2024 2023 and in 2024 you know, you're just gonna continue to see more and more of that, you know, maybe it becomes a household word. I don't know. All right, Brad, we are going to leave it there.
We'll talk more. I'm sure about the technology that uh powers everything we talk about in 2024 and in the meantime, enjoy your holidays. Thank you. You too, Jen. Thank you. All right, that was coin Desks, managing editor of tech and protocols. Brad Cow. Don't forget to sign up for the protocol newsletter. You can go to coin desk.com/newsletters or you could just type the protocol into Google. The protocol is also available as a podcast on the Coin Desk podcast network.
Source : CoinDesk / Dec 28, 2023