VCs: The Unsung Heroes Fueling Bitcoin’s Wild Ride 🚀

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Imagine a world where venture capital is the unlikely architect behind the scenes of Bitcoin‘s infrastructure—a place where, despite the passionate protests of self-appointed Bitcoin purists, the help is not only welcome, but downright essential. At Token2049 in sunny Dubai, builders explained that without the deep pockets and daring resourcefulness of VCs, Bitcoin’s second-layer innovations would be left shivering in the cold. 😅

Charlie Yechuan Hu, the charismatic CEO of Bitlayer (a leading Bitcoin layer-2 protocol), confessed to CryptoMoon that many venture capital firms actually play a rather heroic role by pumping cash into nascent projects that need a little extra oomph to set up shop—be it for hiring genius developers or paying the lofty cloud bills (hello, AWS and RPCs!). As Hu wryly put it, “You need developers, you need to open up the whole ecosystem foundation, everything… So, we have to have VC on that.”

Far from buying into the conventional Bitcoiner mantra of snubbing external capital, Hu argued that expecting a neat little mint and a healthy treasury to pay for all those pesky server costs is a fairy tale best left to the bedtime stories of Silicon Valley. “It doesn’t work that way,” he chuckled.

Lightning Strikes With a Dash of Skepticism

Not everyone is rolling out the red carpet for VC money, though. Mike Jarmuz, the ever-opinionated managing partner at Lightning Ventures, stated that his firm’s interest is solely reserved for the nimble and rapid Lightning Network. According to him, dabbling in projects that dangle tokens for staking and absurd yields is akin to inviting a rug pull right to your doorstep. đŸ€š

Jarmuz mused that the Lightning Network—making Bitcoin transactions faster than a caffeinated cheetah, nearly free, and scalable—stands in stark contrast to “masquerading” projects that claim utility but barely add a whisper to Bitcoin’s robust reputation. As per Bitcoin Visuals, the network has a channel capacity akin to nearly $452 million at the time of writing.

“There is no ‘token’ when using the Lightning network. It’s Bitcoin. That to me is the only real L2, at least as of right now.”

Lightning Network illustration

Jarmuz didn’t hold back: projects failing to meet his stringent criteria are nothing more than pretenders in a Bitcoin carnival, often just waiting for the inevitable rug pull. While sidechains like the Liquid Network and whimsical newcomers like e-cash and federations might be “interesting,” they simply aren’t ready for prime time. “We don’t invest in that area,” he declared with a hint of amusement.

VCs: The Reluctant Saviors of Bitcoin?

Hu emphasized that venture capitalists supply more than just money—they bring liquidity, resources, and a treasure trove of experience to fledgling startups. Their knack for unlocking institutional networks could very well be the secret sauce behind Bitlayer’s success. Without their backing, Hu joked, his team would be like a ship lost at sea without wind. ⚓

Arguing further, Hu noted that VCs are far more interested in long-term infrastructure than in dabbling with whimsical memecoins or flashy non-fungible tokens. This sentiment was echoed by Walter Maffione, the lead engineer at Kaleidoswap—a decentralized exchange operating on the Lightning Network. He recalled how their open-source project transformed into a robust protocol thanks to pre-seed investments from Fulgur Ventures and Bitfinex Ventures, funds that were wisely used to pay developers rather than chase after governance tokens.

Hu then proudly pointed out that many of the layer-2 scalability solutions, wallets, Bitcoin lending, and staking protocols we cheer for today owe their existence to VC support. “All of them are VC-backed, including us. And some of them are listed on top exchanges,” he mused.

Finally, Vikash Singh from Bitcoin VC firm Stillmark explained that when it comes to Bitcoin layer-2 investments, they prioritize protocols with proven security, widespread non-speculative use, and a burgeoning application layer. While he agreed with the virtues of proof-of-work, Singh was less dismissive of other consensus models for sidechains and rollups, leaving room for a bit of playful debate in the ever-evolving Bitcoin saga.

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2025-05-13 18:25