What is Babylon? A story about the future of money, putting your sleeping Bitcoin to work

Introduction

Have you ever heard the name "Babylon"?
Are we talking about ancient civilization? No, we are talking about the present. And it has to do with Bitcoin.

If you have ever thought, "Buying Bitcoin doesn't produce anything," you were right until now. However, a project called Babylon is starting to change that way of thinking.

Babylon is working to realize a mechanism where "you can potentially earn additional returns just by leaving your Bitcoin as it is."

In this article, I will answer the question "What is Babylon?" without using too much technical jargon, while still conveying the essence of it.

Chapter 1: The "Immobility Problem" of Bitcoin

Bitcoin is called "digital gold."
It is a dream-like currency that allows you to send money from anywhere in the world with just a smartphone and trade without relying on a bank, but it has had one major problem.

That is—
**"Just holding it doesn't produce anything."**

For example, if you deposit money in a bank, you get a little bit of interest, right?
With investment trusts or stocks, if things go well, you might get dividends or capital gains.

However, Bitcoin has never had such a mechanism.
You make money if the price goes up, but that depends on luck and timing. So-called "passive income" did not exist for Bitcoin.

Chapter 2: The Solution Called Staking

Other cryptocurrencies have a mechanism called "staking."

This is a system where you lock (deposit) your currency to cooperate in the operation of the blockchain network and receive rewards in return.

In short,

• you "deposit" your currency without moving it,

• use that power to protect the security of the network,

• and receive rewards little by little as a thank you.

This is staking.

However, Bitcoin does not have this mechanism. Why?
It is because Bitcoin's design is very simple and old. At the time, the concept of staking did not even exist.

Chapter 3: What Babylon Solves

This is where "Babylon" comes in.

Babylon does not "change Bitcoin itself."
Instead, the idea is to "let other networks use the power of Bitcoin."

What does that mean?

1. You lock your Bitcoin using the Babylon mechanism (making it immovable).

2. Then, the "fact that it is locked" becomes usable within another blockchain (such as Cosmos).

3. You can receive rewards by cooperating with the "validators" that support the Cosmos network.

In this way, you can keep your Bitcoin without moving it, while putting it to work elsewhere. It is similar to the feeling of "letting your money work for you."

Chapter 4: How is that possible?

This gets a little technical, but what Babylon has achieved is "technology that connects Bitcoin to other blockchains (cross-chain security)."

What is interesting about this mechanism is that you can reference the holding status of Bitcoin on other networks without actually moving the Bitcoin itself.

For example, if you put your Bitcoin in a safe and can prove that "this will not move," that information can be used by another network.

Babylon is responsible for exactly that "proof" and "connection" part. As a result, Bitcoin holders have the potential to earn rewards, albeit with certain risks involved. However, because there are risks such as smart contract bugs, network-side risks, and restrictions associated with deposits, neither the principal nor the returns are guaranteed.

Chapter 5: Why is this attracting attention?

The reason companies and investors are paying attention to Babylon right now is clear.

• You can manage your assets without selling your Bitcoin.

• There is a possibility of earning additional returns separate from price fluctuation risk.

• It is also a new challenge as a blockchain technology.

This is a major opportunity, especially for "large companies that were just holding onto their Bitcoin."
They already hold Bitcoin worth tens of billions of yen, and it is just "lying dormant."

That might change to "utilizing Babylon to gain additional revenue opportunities." That is why investors around the world are paying attention to this technology.

Chapter 6: Does this have any meaning for the rest of us?

"Isn't that just for companies and investors?"
You might think so. But this is a story that will eventually reach general users as well.

For example, suppose you have a cryptocurrency wallet in the future and buy Bitcoin.
When you feel it's a waste to just hold onto it, a mechanism like Babylon will allow you to choose to "deposit and earn a return."

Instead of keeping money in a bank, you earn by keeping it on the blockchain.
Such a future is gradually becoming a reality.

Conclusion

Babylon is still a developing technology, but it is a very unique project that is taking on the challenge of "giving value to idle Bitcoin."

• "Putting" Bitcoin to work

• Moving assets while keeping them secure

• A new way to use money in the cross-chain era

When the future comes where you interact with cryptocurrency, mechanisms like Babylon might become the norm.

It might look like "technical talk you don't quite understand" right now, but what that technology is doing is simple.

"Turning sleeping money into living money"—it's close to that kind of idea.

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Bonus

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Please take a look if you are interested.