Jonathan Hargreaves, Elastos
We have the privilege of interviewing Jonathan Hargreaves, Global Head of Growth at Elastos
Jonathan has over 25 years of experience in the Internet and Web3 sectors, helping technology companies build trusted global brands.
Currently, he leads the deployment of Elastos’ BeL2 protocol, which enables smart contracts directly on Bitcoin, introducing BTC staking for the first time. This innovation could position Bitcoin as a new reserve currency for secure, verified agreements.
Previously, as Global Vice Chairman at Edelman, Jonathan developed strategies to drive marketing and growth for major tech brands like Microsoft, LinkedIn, Airbnb, and Box across three generations of the web.
Since 2016, he has applied his expertise to Web3 projects, including Cardano and BlockOne, and serves as Head of ESG and Development at CreDA.
Jonathan also co-founded Metaverse4Good to advance ESG solutions in Web3 and has advised ICANN and the Web Science Trust on the Web3.0 vision.
INSIGHTS
According to research conducted among 1,000 ‘tech-savvy’ consumers across seven global markets, 60% conduct Bitcoin transactions at least once a month, and 38% use the currency at least once a week. These findings reveal a significant proportion of consumers using Bitcoin beyond mere price speculation, as shown by the following insights:
- 43% of respondents use Bitcoin to store their savings
- 37% use Bitcoin to make online purchases
- 28% use Bitcoin to send or receive money from abroad
- 19% use Bitcoin to reduce banking costs
There are many motivations behind this increasing use of Bitcoin, ranging from prohibitive traditional banking costs to concerns about privacy. This trend is expected to accelerate, particularly as it becomes easier to leverage Bitcoin’s benefits, such as security and integrity, for any direct agreement between two parties.
One key development driving this trend is the emergence of Bitcoin staking, which allows Bitcoins to be used similarly to tokens like Ethereum and Tezos. Staking represents an opportunity to unlock potentially over $1 trillion in value that would otherwise remain dormant.
This is the exciting news behind Elastos’ BeL2 protocol, launched at the end of last year. The first example of Bitcoin staking in action was introduced last week in Nashville: an SDK called StarBTC, designed to build a peer-to-peer loan application based on a smart contract denominated and assured directly in Bitcoin.
The result is native BTC lending without BTC leaving the main network, thanks to BeL2’s innovative use of zero-knowledge proof technology to validate and ensure all aspects of the contract are being adhered to. In all cases, it’s the information rather than the assets that is transmitted across chains, allowing Bitcoin to participate in smart contracts without leaving the main network.
Peer-to-peer loans are just the first example of the practical benefits and uses of Bitcoin staking; the potential to denominate and assure any peer-to-peer agreement directly in Bitcoin is limitless.
Interview Questions:
1. What do you mean by the concept of the rise of native Bitcoin?
Jonathan: The first aspect is considering and using Bitcoin beyond an investment asset to hold or arbitrage based on valuation. While Bitcoin remains an important alternative or decentralized asset, consumers increasingly use Bitcoin for various daily transactions.
For instance, according to Elastos’ BIT Index research conducted among ‘tech-savvy’ consumers across seven global markets, 60% conduct Bitcoin transactions at least once a month, and 38% use the currency at least once a week.
There are many motivations behind this increasing use of Bitcoin, ranging from prohibitive traditional banking costs to concerns about privacy. This trend is expected to accelerate, particularly as it becomes easier to leverage Bitcoin’s benefits, such as security and integrity, for any direct agreement between two parties.
2. Bridging and other workarounds already offer the possibility of Bitcoin-denominated smart contracts; what’s the difference with BeL2?
Jonathan: Correct, solutions like RSK, DriveChain, Liquid, Rollkit, RGB, and the Lightning Network offer Layer2 workarounds, enabling smart contracts to be denominated in Bitcoin.
However, they all lack a core capability: the Bitcoin network and the second-layer network cannot mutually perceive transactions on each other’s chains. BeL2 enables users to operate seamlessly in Bitcoin, as if they were in a purely native Bitcoin environment, without actually impacting the BTC layer.
Unlike the native Bitcoin environment, the user is not limited to simple exchange-based transactions; the entire world of staking, smart contracts, and their variants becomes available in ‘native’ Bitcoin (native in the sense that the full capabilities and qualities of Bitcoin—integrity, security, minimal network fees, minimal congestion, etc.—are not compromised in the process).
In effect, everything users can do in ETH is now possible directly in the world’s most popular, secure, ubiquitous, and valuable digital currency. Before BeL2, this was simply impossible.
3. Can you cite more examples and evidence of Bitcoin becoming a more mainstream currency for transactions and exchange (rich survey data)?
Jonathan: Elastos’ BIT Index research reveals that a considerable proportion of consumers are using Bitcoin beyond mere price speculation:
- 43% of respondents use Bitcoin to store their savings
- 37% use Bitcoin to make online purchases
- 28% use Bitcoin to send or receive money from abroad
- 19% use Bitcoin to reduce banking costs
The motivations and drivers for switching to Bitcoin are varied. One in three respondents (31%) describe themselves as ‘uneasy’ or ‘completely uncomfortable’ about sharing personal information when transacting on social media, for instance, while 31% would trust Bitcoin to protect their life savings more than traditional banks (10%), online banks (22%), or even cash (just 13%).
When comparing different cryptocurrencies, 64% of respondents would trust their life savings in Bitcoin, dwarfing trust in other cryptocurrencies like Binance Coin (BNB) and Ethereum (ETH), both at 9%, followed by Tether (USDT) at 6%, and Dogecoin, in which only 4% would trust their life savings.
4. What is the technology behind BeL2? How is it possible to enjoy all the benefits of Bitcoin while leaving it untouched?
Jonathan: Zero-knowledge proof technology (ZKP) is fundamental to the BeL2 protocol. ZKP generates mathematical proofs for certain complex calculation processes. By verifying the proof results, it can be confirmed that the corresponding calculation process is valid, expected, credible, and unforgeable.
The main process involves generating a zero-knowledge proof for the BTC main network transaction and then verifying it by the second-layer network. This allows the second-layer network to perceive the transaction content of the first-layer network. Based on zero-knowledge proof technology, the second-layer network can trust that the transaction is genuine and valid.
On this basis, information can be transferred from the first-layer network to the second-layer network and vice versa through the relayer (or Arbiter). Throughout the process, Bitcoin integrity remains uncompromised. Unlike bridging or wrapping alternatives, the principle of “no cross-chain assets, only cross-chain information” ensures the BTC network remains untouched.
5. Can you explain the inaugural application, the BTC loan product—how does it work, and what are its advantages over non-decentralized loan apps?
Jonathan: Last month, we launched Star BTC, an SDK Bitcoin Loan product to enable L2s (or their partners) to provide genuine peer-to-peer credit and assure it through Bitcoin.
The loan mechanism allows Bitcoin users to collateralize up to 80% of their assets in return for L2 credit (stable coins, for instance) based on terms defined in a Bitcoin-assured smart contract. Thanks to the BeL2 protocol, this process can be completed without bridging, wrapping, or otherwise interfering with the Bitcoin layer; this both assures the integrity of the currency and avoids network congestion and additional fees.
This is a perfect example of the potential of Bitcoin-based smart contracts. BeL2’s unique ZK-proof process ensures complete interoperability while leaving the Bitcoin layer entirely untouched.
Potential loanees can take loans against up to 80% of their Bitcoin deposit, which is locked via a BTC locking script, and accessible to the creditor (and loanee) subject to the terms of their mutual agreement. The latter is documented and assured in a Bitcoin-denominated smart contract.
The loanee can use a transaction proof (tx proof) to prove they have made the transfer.
- The creditor can use the tx proof to report any malicious signatures by the Arbiter.
- Both loanee and creditor can use a script proof to prove that the BTC locking script complies with their agreement.
- By utilizing BTC locking scripts, smart contracts, and the tx proof supervision mechanism, a complex BTC lending and gaming transaction can be constructed.
This is a genuinely peer-to-peer loan product; it’s not simply Bitcoin-based credit but completely disintermediated and anonymous. Verification (through services like ScaleBit) and associated costs/delays would only be required in the event of a dispute between the two parties.
6. Bitcoin staking also represents a huge opportunity for node managers (and their entire BTC ecosystem) since there will potentially be more Bitcoin activity and more transactions to validate. Is this likely to offset the decline in fees following April’s BTC halving?
Jonathan: Increased and more diverse uses of Bitcoin to assure any agreement directly between two parties is likely to lead to increased transaction volumes and, in turn, greater revenue opportunities for validators.
The combination of BeL2 enabling genuinely native Bitcoin to be staked, together with a potentially infinite variety of use cases—peer-to-peer credit being just one example—offers the potential for both developers and node holders to earn significant premiums from staking Bitcoin.
7. You refer to ‘arbiters’ when talking about node managers; is this simply positioning (to differentiate), or is there a more fundamental distinction compared to the traditional node model?
Jonathan: Elastos’ BeL2 lets users run zkBTC full nodes on mobile phones, creating a decentralized Bitcoin DeFi network. These nodes ensure security by allowing users to verify transactions themselves. Upgraded zkBTC nodes can become arbiters, earning fees for helping others manage loans and time-based transactions.
This system supports Bitcoin staking and rewards nodes with upcoming BeL2 assets and BTC fees. To prevent collusion, anyone can challenge arbitrators by submitting proof of misconduct for punishment and compensation.
Arbiter nodes are backed by BTC and Elastos SmartWeb’s ELA coin, secured by up to 50% of Bitcoin miners’ hashpower, including BTC.com, Antpool, F2Pool, ViaBTC, and BinancePool.
This model enhances the Bitcoin network by increasing the number of full nodes, which are essential for maintaining decentralization and security. By incentivizing node participation, the network’s robustness and resilience are strengthened.
Full nodes validate transactions and blocks, contributing to the overall health of the blockchain. Increased participation fosters a secure and trustworthy environment for Bitcoin transactions, which is crucial for the adoption of decentralized finance.
8. Who else shares your vision for unlocking the potential of Bitcoin collateralization (staking)? Can you name or describe any partners who have signed up and are developing around BeL2?
Jonathan: We are continually appointing and collaborating with partners who see the value and opportunity in native Bitcoin to ensure and manage a range of transactions and services:
BEVM: Developing a loan mechanism that allows Bitcoin users to collateralize up to 80% of their assets in return for Layer 2 (L2) credit (such as stablecoins) based on terms defined in a Bitcoin-assured smart contract. Thanks to the BeL2 protocol, this process can be completed without bridging, wrapping, or otherwise interfering with the Bitcoin layer. This approach both preserves the integrity of the currency and avoids network congestion and additional fees that might otherwise occur. In addition, BEVM will collaborate further with BeL2 to deliver a BTC Oracle to monitor and analyze all Bitcoin-based activity in real time.
B² Network: A Layer 2 Ethereum Virtual Machine (EVM) execution environment that uses Wrapped Bitcoin (WBTC) as gas, enabling complex transactions and smart contracts at a fraction of the cost, all assured by Bitcoin’s security and integrity.
AIOZ: For data archiving, benefiting from the built-in Content Delivery Network (CDN) powered by over 150,000 AIOZ #DePIN nodes. Integration with BeL2 provides higher levels of security and privacy, offering users a comprehensive data protection solution.
Conflux: The world’s only regulatory-compliant, public, and permissionless blockchain in China. Integration with BeL2 will facilitate Bitcoin-denominated transactions and exchanges.
Tuna Chain: A Layer 2 solution ensuring interoperability between respective ecosystems. Additionally, Tuna Chain will leverage Elastos’ Bitcoin Oracle to source and utilize real-time data on Bitcoin-assured activity across the ecosystem.
EastBlue: A Bitcoin super app. Elastos will integrate our BeL2 technology into the EastBlue platform, connecting users to Elastos’ full portfolio of decentralized applications (dApps), tokens, and other functionalities within the Elastos ecosystem.
Spending Power: A Web3 e-commerce platform. We are developing and incorporating native Bitcoin dApps into Spending Power’s offering via BeL2, including the recently launched loan product.
PortalDeFi: Integrating the Portal Swaps SDK with BeL2 to provide broader access for our community to BTC, BRC20s, ERC20s, and other EVM assets via trustless atomic swaps.
Particle Network: A modular Layer 1 blockchain focused on chain abstraction technology, simplifying developer and user experiences. Partnering with Elastos’ company, Elacity, to enable user accounts to abstract the typically complex blockchain interface and engage with Web3 in an intuitive, easy-to-use environment that emphasizes convenience.
Importantly, Elacity will introduce the use of a Layer 2 (BeL2) to ensure that key fundamentals, such as tokenization, user ownership of data, and mechanisms for equitable sharing, remain at the core of a simplified user experience.
9. Why are you now referring to the Third Age of Bitcoin? What does this mean, and how will it play out?
Jonathan: The ‘mainstreaming’ of Bitcoin represents the culmination of a series of technical, societal, and regulatory shifts, many of which are a reaction to the shortcomings of traditional fiat (or centralized) financial systems.
We see this development unfolding in three acts:
- Speculation: Since 2008, Bitcoin has been viewed primarily as a tradeable asset.
- Means of Payment: Bitcoin (BTC) as a transaction mechanism for direct sales and purchases, free from intermediaries.
- Smart Finance: Bitcoin empowers individuals to provide and receive financial services, instruments, and other value directly from each other according to mutually beneficial terms. Essentially, it offers the opportunity for any citizen to literally be their own bank.
This is the essence and meaning of the Third Age of Bitcoin, which we are now entering.
10. Do you believe that Bitcoin could ever rival the U.S. dollar as a reserve currency? How could it impact the way people conduct business, save, and exchange value?
Jonathan: Due to its controlled and predictable supply, Bitcoin is—by design—a virtually inflation-resistant medium of exchange, perfectly fulfilling one of the Bretton Woods pillars of stability. The challenge remains: how to increase liquidity (beyond speculation) without compromising the security and integrity on which its value is based.
The emergence of Bitcoin Layer 2 (BeL2) could represent the missing piece needed for an alternative reserve currency. The BeL2 protocol enables smart contracts to be created and managed directly in Bitcoin, complete with all the associated conditions, dependencies, and obligations.
By using Bitcoin as an anchor asset, a more stable and sustainable digital currency ecosystem can be built. This system can provide users with not only a safer and more reliable digital currency payment tool but also more innovation and development opportunities in the financial industry.
We are not suggesting (or even recommending) an alternative reserve currency, but to quote Jack Dorsey on the subject:
“It’s going to take some time, but little by little, people see the value of this system and why it’s so powerful and why it could potentially complement or replace the U.S. dollar, which rules everything and is currently being challenged by the Chinese yuan,” Dorsey said at The Festival of the Sun event in Italy earlier this year.
In essence, stakeable Bitcoin has the potential to underpin a new or complementary Bretton Woods offering both value and liquidity—one not controlled by a single individual or country, but instead by the collective choices of its users.
11. Finally, as we conclude this interview for today, how does Elastos plan to educate and attract more developers and users to build on and use the BeL2 protocol?
Jonathan: We are constantly working with and partnering with Layer 2s and developers to support the creation of BeL2-powered applications. Our Destiny Calls grant program also provides practical and financial support to nurture BeL2 products.
Additionally, Elastos’ global PR and marketing team is actively promoting new products to help them gain awareness and market traction.
