Original: Top 4 Directions of Bitcoin Ecosystem Scalability
Author: kenyou Compiled by Gwei Research
The emergence of Ordinals NFT and BRC-20 tokens has once again pushed the scalability of the Bitcoin ecosystem to the forefront.
At present, supporters of the Bitcoin ecology are divided into two factions: Conservatives believe that Bitcoin must maintain its pure currency nature, it is only used as a store of value and does not require other forms of scalability; radicals believe that Bitcoin needs to be expanded , Only in this way can we have more native application ecology and promote its large-scale and sustainable development.
The two parties seem to be unable to reach an agreement on each other's opinions. Is there a solution that can satisfy conservatives and radicals at the same time, and at the same time allow Bitcoin holders to choose freely according to their own needs?
Below, I will discuss the four major directions of Bitcoin scalability development from the four perspectives of scalability level, decentralization, ledger security, and implementation difficulty, and discuss their development trends.
Non-upgradeable Scaling
No-upgrade expansion means that no changes are made to the existing technical system of Bitcoin, and only the existing characteristics of Bitcoin are used to achieve a specific type of expansion.
Representative technologies include RGB and Bitcoin Script. RGB is a scalable and encrypted smart contract system that can run directly on the Lightning Network, but all the data it generates exists outside the Bitcoin transaction (off-chain), which means the security of the entire ledger The security of the Bitcoin mainnet cannot be relied upon.
Ordinal is implemented using Bitcoin Script (Bitcoin Script) to add additional data and assign a unique serial number to each of Bitcoin's smallest units, Satoshis (Sats). This approach offers only minor improvements to Bitcoin's scalability. There is currently a wave of hype around Bitcoin NFTs and BRC-20 tokens in the market, but the sustainability of their value remains to be seen.
Except for the functions endowed by the third party to Sats, from the perspective of the Bitcoin main network, the data attached to various scripts are meaningless garbled characters, resulting in waste of Bitcoin block space and transaction congestion, which also caused some Bitcoin Strong dissatisfaction among members of the coin community.
Generally speaking, the non-upgradable expansion technology solution is decentralized, and does not require the overall consensus of the Bitcoin community in terms of implementation difficulty, but at the same time, RGB failed to rely on the consensus security of the Bitcoin main network and the implementation of Bitcoin through scripts. Transaction scalability is very limited.
Sidechain (Sidechain)
The second method is a sidechain, which creates a separate chain and links it to the Bitcoin mainnet through specific cross-chain technology.
It used to be a popular and relatively easy-to-implement Bitcoin scaling solution, mainly because sidechain projects could issue their own tokens, which could arouse community and market interest as their value increased. However, major players in such schemes have had some problems scaling Bitcoin.
Projects such as Liquid (BlockStream), Stacks, and Rootstock map BTC to sidechains through a two-way cross-chain bridge. This is their common feature, but there are also subtle differences.
Liquid is more like a Bitcoin alliance chain composed of large institutions, and the BTC mapping and conversion between the side chain and the main network requires the multi-signature agreement of these institutions.
Stacks is a Bitcoin sidechain technology that issues new tokens. Its PoX protocol is a protocol that allows miners to stake BTC by staking STX. However, how the protocol achieves decentralized distribution remains to be studied.
Rootstock adopts the sidechain technology of merged mining, and the cross-chain transmission of BTC is controlled by multiple signatures of multiple institutions (BTC→rBTC).
However, the side chain nodes are not accessible to everyone, and the ledger consensus relies on the management of some centralized institutions, resulting in a low degree of decentralization. This may be the main reason why the side chain expansion solution has been tried many times but has not yet been adopted on a large scale. reason.
Upgrade-based Scaling
Upgraded expansion refers to the need to upgrade the technical architecture or technical system of the Bitcoin network. A representative example is BIP-300/301 proposed by the LayerTwo Labs team. Its expansion concept is called Drivechain, which essentially uses Rollup to expand capacity.
Currently, LayerTwo Labs’ approach is to directly hard fork a PoW main chain with BIP-300/301. When the Bitcoin community reaches a consensus and approves this main chain, the Bitcoin main network will be upgraded to BIP300/301.
Overall, LayerTwo Labs' solution can guarantee the decentralization of Bitcoin and solve the problem of expansion. However, its expansion and upgrade requires the consensus of the Bitcoin community, and under the current overall atmosphere of the community, it is extremely difficult to upgrade the Bitcoin mainnet.
One-way Transfer
Bitcoin's two-way transfer is a commonly used method in cross-chain and side-chain scenarios. Bitcoin's one-way transfer expansion scheme was proposed by the Hacash community and the Hacash.com team. The principle is to irreversibly transfer Bitcoin to a new chain that is theoretically more decentralized and more mature in technology, and then adopts a multi-layered approach for scalability.
The first layer of Hacash can realize the one-way transfer of Bitcoin, transferring the BTC on the Bitcoin chain to the Hacash chain. During the transfer process, the user's private key remains unchanged, and the same private key can be used to directly use the Bitcoin on the Hacash chain, and the control of BTC has not been transferred to any other entity.
Based on the Hacash chain, there are Layer 1 and Layer 2 payment networks, and the Hacash.com team also proposed a Layer 3 multi-chain scalability infrastructure. Bitcoin can be used for instant payments at Layer 2 and for application scaling at Layer 3. The essence of Layer 2 is to use state channels for instant payments, and the essence of Layer 3 is to use multi-rollup and multi-rollup's customizable scalability methods. Overall, the Hacash chain that accepts BTC one-way transfers still uses a pure PoW consensus mechanism, and anyone can run a full node.
On top of this, layers 2 and 3 address scalability issues. Anyone can choose to transfer their BTC to the Hacash mainnet, and it is up to each Bitcoin holder to decide whether they need scalability, and the implementation difficulty is relatively low compared to other solutions.
Summarize
There are four main approaches to scaling the Bitcoin ecosystem: no-upgrade scaling, sidechains, upgradeable scaling, and one-way transfers. Non-upgradable expansion cannot achieve strong scalability and ledger security at the same time. There is a problem of centralization in the side chain. It is difficult to implement upgraded expansion. One-way transfer is relatively good in the four evaluation dimensions, but it has not received widespread attention from the market. .
Created over the past decade with the goal of a decentralized currency, the store of value has proven to be at its core and theoretically does not require any scaling to achieve this goal. How to achieve scale while maintaining the ability to store value of Bitcoin, and even after digging out 21 million pieces, to achieve sustainable development in the future will undoubtedly be the main direction of Bitcoin's future development.
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