Building a Financial System on Bitcoin | WILLEM SCHROE

“People in finance understand the financial system, but not money. People in Bitcoin understand money, but not the financial system.”

In a world where financial markets make up 70% of all money flow around the world — we have two choices: come up with technical solutions that enable these use-cases in a decentralized way, or simply accept that Bitcoin will be used in a custodial way whenever more complex use-cases are at play.

Botanix CEO Willem Schroe is staunchly rejecting the latter — and attempting to solve some of the toughest challenges faced by the L2 and scaling landscapes (e.g. the “honeypot problem” that nearly all other L2s will ultimately face if not addressed).

Willem and I break down the design space of Bitcoin L2s, why DeFi may be necessary for Bitcoin’s financial system to emerge, and how different technologies — like Spiderchains, BitVM, Lightning, and others — could eventually combine into a decentralized Bitcoin-native financial stack.

In this episode, we discuss:

- Why Bitcoin needs a financial system, not just payments (hint: without it, we'll end up like Gold)

- The role of DeFi and stablecoins in Bitcoin adoption

- The "honeypot problem" introduced by most Bitcoin bridges, and how implementing Spiderchains could be the solve

- Combining Spiderchains, BitVM, and other models into the ultimate Bitcoin scaling stack

This episode of Bitcoin Rails is powered by:

- Best In Slot (@bestinslotxyz) — the leading API for Ordinals and BRC20 data aggregation and indexing.

- Spark (@lightspark) — a statechains implementation advancing Bitcoin-powered payments.

- Citrea (@citrea_xyz) — a leading Bitcoin rollup technology and BitVM alliance contributor.