Judging from the recent discussions in the encryption community and the release of new projects, the Bitcoin expansion track seems to be on the road to becoming the next mainstream narrative. Since the first layer of Bitcoin does not currently support smart contracts, and the large block route represented by BCH and BSV has been denied, the Bitcoin expansion ecosystem is now almost entirely dominated by side chains or Layer 2 solutions, but there is also no shortage of mainnet upgrades Or competition in new expansion models such as one-way transfer.
This article summarizes Bitcoin expansion technology into five major categories:Sidechains, inscription scripts, Taproot protocol, mainnet upgrades and one-way transfers。
In terms of the underlying technical core and economic model, expansion technologies of the same category have similar advantages and face roughly the same fundamental constraints. By comparing the advantages and disadvantages of these old and new expansion plans from multiple dimensions, we try to draw a panoramic view of the Bitcoin expansion ecosystem and a guidebook of the advantages and disadvantages of the track direction.
side chain
This is not the first time that Bitcoin expansion needs have been discovered and paid attention to. As early as December 2013, the Bitcoin community proposed the concept of side chains, which can transfer BTC from the main chain to other independently developed blockchains. circulate and can be returned to the main chain.
The side chain solution is based on Blockstream’sLiquid、StacksandRootStockAs representatives, they differ in terms of incentive mechanisms. For example, Stacks mainnet token STX can be pledged to obtain transaction fees paid in BTC. Rootstock uses merged mining with the Bitcoin mainnet in order to gain the support of Bitcoin miners.
advantage:
1.Strong expansion capability:Since it is another blockchain developed and run independently, it can break through the limitations of Bitcoins own technical framework and adopt more avant-garde blockchain technology. Generally speaking, Turing-complete smart contract functions are added to the side chain in order to usher in an application ecological explosion like Ethereum.
2.Low side effects:There will be almost no negative impact on the Bitcoin mainnet, just the addition of some cross-chain transfers for token transactions with specific addresses.
shortcoming:
1.BTC centralized management issues:It is usually the same as the management mechanism of other cross-chain bridges between blockchains. Although the operating mechanisms described are different, they are essentially multi-signature addresses controlled by multiple entities that uniformly store the Bitcoins linked to the side chain. We cannot 100% assume that these managers will not compromise or collude under some kind of pressure, or even ensure that the same entity is not behind these purported “decentralized nodes”.
2.Team control:The team has great control authority, and the initial decentralization of the main network is seriously insufficient.
3.Diversion mainnet fees:Diverting the handling fees from the Bitcoin main network and reducing incentives for miners may cause potential ledger security risks.
In fact, almost ten years have passed since the concept of sidechain was first proposed. The reason why it still has not become a recognized and successful Bitcoin expansion mechanism is mainly due to the centralization problem mentioned above.
script inscription
byOmni Layer、Ordinals、BRC-20、RunesIt is represented by the feature of adding some kind of descriptive data directly into the output script of a Bitcoin transaction to describe the issuance or transfer of assets.
Typically implemented using the OP_RETURN opcode, output with this opcode is ignored by normal Bitcoin nodes, but can be interpreted by custom nodes that are aware of these token protocols and implement the specific token protocol. Verify the rules and handle related matters such as asset issuance or transfer separately outside the Bitcoin main chain.
This blockchain data burning scheme, called dying or inscription, is actually the result of being restricted by the Bitcoin UTXO transaction structure, rather than a maturely designed technological innovation, or just a patch. .
advantage:
1.Simple enough:Most of them are in intuitive data formats such as JSON, which are human-readable to a certain extent. A simpler protocol can also develop peripheral tools and ecology faster, which is also an important reason why the Ordinals protocol can become popular quickly.
2.On-chain data availability:Basically, all metadata is stored on the Bitcoin chain, and only the protocol characterization data needs to be interpreted off-chain.
shortcoming:
1.Occupying on-chain space:This creates a burden on full node operations and affects the decentralization of the Bitcoin mainnet. The popularity of some projects often leads to mainnet congestion.
2.Asset fragmentation problem:Since each NFT is represented by one satoshi, it will affect the fungibility of BTC and create a lot of dust BTC.
3.Expansion capabilities are very limited:It is basically limited to asset issuance and cannot handle more DeFi needs.
4.Weak security:The inscription is just a text in a specific format that is meaningless to Bitcoin and relies entirely on off-chain consensus to operate. The reason why the decentralized blockchain has sufficient security is that the relevant rules are executed and verified on the chain.
Taproot protocol
Taproot is a compression, hiding and structuring technology for Bitcoin unlocking scripts, which can support more complex script logic without changing the amount of data.
Take Lightning Labs’ just-releasedTaproot Assetsis a Bitcoin dollar protocol that can be directly integrated with the Lightning Network, supporting FT and NFT. The feature is not using Bitcoin as a complete data availability layer. By default, users store data themselves or use off-chain data storage services.
Recently ZeroSync developer Robin Linus released a new Bitcoin proposalBitVM, can be regarded as an enhanced version of the Lightning Network. The logic of Bitcoin contracts will be executed off-chain, but verification will occur on the mainnet. BitVMs architecture is based on a fraud proof and challenge response model, where provers can make claims and verifiers can perform fraud proofs to punish the prover when false claims are made.
In addition, the latest version of the RGB protocol, which has been reconstructed and evolved many times, is also compatible with Taproot and the Lightning Network.
advantage:
1.Protocol native:Compatible with the Bitcoin native protocol Taproot, the technical foundation is highly secure and has higher market acceptance. Multiple protocols share the same set of infrastructure, with strong potential for composability.
2.High degree of decentralization:The protocol is highly open and there is no need to worry about funds being controlled by any founding team.
3.Low side effects:Basically, calculations or gaming operations are performed outside the chain. The Bitcoin mainnet is only responsible for the final aggregation or arbitration, and does not need to disclose all script logic. Only the valid part of the data needs to be given, avoiding the state explosion problem caused by Ethereum including all codes and calls on the chain.
shortcoming:
1.Poor scalability:Most only support basic functions in simple scenarios, such as hash locks, time locks and multi-signatures. For example, a major limitation of the BitVM model is that it only applies to situations where two parties are playing against each other, one playing the role of proving correct execution and the other playing the role of verifying correct execution.
2.Interaction troubles:It is necessary to first lock the funds as the target of punishment, then construct multiple script paths and generate UTXO transactions. BitVM also requires that in a cooperative situation all parties involved remain engaged at all times.
3.Data redundancy:For example, the client verification mode of the RGB protocol requires users to retain all historical transaction records of related tokens and send them to the token recipient when transferring money.
4.The agreement is complex:If you want to support programmability like Ethereum, you will be subject to the limitations of the UTXO structure, making the technology implementation very complex and beyond the level that most people can quickly master. The development of related tool ecology will be more difficult and scarce, thus seriously affecting market adoption. .
Mainnet upgrade
Represented by LayerTwoLabs, it releasedBIP-300 andBIP-301 The Bitcoin improvement proposal intends to make the Bitcoin protocol natively support some kind of Rollup expansion technology by adding new script opcodes.
It has to be said that trying to promote the upgrade of the entire Bitcoin mainnet technology, even in a small way, may be the most hard-core approach. Because this means directly pointing out some of the shortcomings of Bitcoin and acknowledging that Bitcoin is not the final and most perfect solution.
advantage:
1.Native protocol:Iteratively upgrades the Bitcoin core layer directly, supports Rollup type expansion, and is better in terms of data availability, security, etc.
2.Tools and ecosystems are growing faster:Once the mainnet is successfully upgraded, it will receive more focused attention than other solutions, and the community can concentrate on building various supplies and infrastructure with more trust.
shortcoming:
1.Extremely difficult to implement:It seems almost impossible at the moment. It is too difficult for a startup team to convince the institutions, miners, mining pools, development groups, KOLs, users, ETF applicants, etc. in the entire Bitcoin community to gain their unanimous support and balance the interests of everyone. work.
2.Technical risk concerns:The solution to directly upgrade Bitcoin has much higher requirements for the high quality and maturity of the expansion technology than other solutions, and it cannot tolerate any potential errors. This will cause everyone to be more cautious about the upgrade of the protocol layer and further increase the difficulty of implementation.
One-way transfer
Posted by HacashBTC One-Way Transfer As a representative, it can be considered as a technology that upgrades the side chain to an inherited chain or parallel chain that surpasses the Bitcoin main chain in all aspects. Hacash not only iterates on expansion technology, but also claims to upgrade the currency properties of Bitcoin.
In a sense, this is more shocking than the BIP plan of directly upgrading Bitcoin: not only does it feel that Bitcoin is defective, but it also requires completely abandoning the existing main network of Bitcoin, stripping away the value and technology of BTC, and using Another newly developed blockchain technology system will inherit the value of the original BTC.
To give an inappropriate example, one-way transfer is like extracting a persons soul from its original body, injecting it into another body and resurrecting it. The soul is the value of BTC, and the body is the Bitcoin mainnet technology. .
advantage:
1.Mature technology:It has almost solved various technical legacy issues of Bitcoin once and for all, supports layer one defi, layer two large-scale payment, and multi-layer multi-chain expansion model, and the architectural design is more mature.
2.True decentralization:There is no BTC centralized management problem with usual side chain technology, and the degree of decentralization in all aspects of the new chain is not weaker than Bitcoin in terms of technology and economic model.
3.Upgrade as needed:There is no need to obtain unanimous support from the entire community. Each Bitcoin holder can independently decide whether to upgrade (transfer).
shortcoming:
1.Alternative plan:The irreversible one-way transfer model of BTC is too alternative and challenges everyones existing core consensus and value judgment, requiring more information and proof.
2.The upgrade system is too complicated:It includes multiple levels of expansion protocols and upgrades and optimizations of currency attributes, and also involves monetary economics theory, which is difficult to understand.
The prosperity of an ecosystem must be that various paths are fully discussed and widely tried, and high-quality solutions that are in line with the essential logic of industry development are finally competed for. It’s too early to predict the success or failure of these projects, but regardless, we seem to have seen a slightly vague future:The King of Bitcoin has returned and reoccupied the center of the stage, and once again lit up the world with the great encryption spirit of decentralization and trustlessness.。
