This article, written by Botanix Labs founder Willem Schroe, discusses why his company is working on developing a decentralized L2 to bring EVM to Bitcoin. The article was first published on BitcoinMagazine, and was compiled and shared with Chinese users by Carbon Chain Value and Weex Exchange.
Bitcoin and Ethereum, despite being twin forces driving the accelerated development and adoption of cryptocurrency and blockchain technology, have historically been at odds due to "L1 wars" and intense contention among their respective network's proponents. To some, this rivalry may appear to be just a cultural war within the cryptocurrency community. Fundamentally, however, it reflects disagreements arising from different underlying beliefs.
Bitcoin: A beacon of decentralization (and liquidity)
Bitcoin aims to challenge the traditional financial system and provide an alternative without intermediaries. The support base is aligned with this goal and therefore includes decentralization (decentralization) as the first criterion.
An example of this commitment is the block size wars between 2015 and 2017, in which small block proponents prioritized decentralization over scalability. Small block proponents insist on uncompromising Bitcoin’s decentralized nature, even if it means limiting its scalability. Proponents of increasing the block size argue that it will help expand the network, lower transaction fees, and increase Bitcoin’s ability to process more transactions per second.
Ultimately, the block size was not increased through a hard fork, as some big block proponents proposed, but through a soft fork - SegWit. Segwit maintains a currency system without central control by increasing transaction capacity through a one-time increase in block size.
WEEX Note: Segregated Witness is to store the transaction signature data (also called witness data) in the blockchain separately from other parts of the transaction (transaction input and output) by modifying the structure of Bitcoin transaction data. Increase transaction capacity while making transaction IDs no longer easily tampered with.
Bitcoin remains the single largest cryptocurrency by market capitalization, valued at approximately $500B, accounting for approximately 50% of overall cryptocurrency liquidity, benefiting from its Stock-to-Flow Ratio (Stock-to-Flow Ratio), which is second only to gold. Bitcoin’s growing prominence in global markets has sparked discussions about positioning Bitcoin as a reserve currency, which is considered one of the main factors in the “quiet erosion of the dollar’s dominance.” Due to Bitcoin's properties and physical form, it will continue to play an important role in the cryptocurrency space, and its liquidity should have the potential to be much more than just a unit of value.
Ethereum: Pioneer of pragmatism
"EVM is now becoming the connecting organization between enterprise standards and blockchain. Even EVM's most ardent critics have now laid out their plans in terms of compatibility."
——Nitin Kumar, zBlocks
While Ethereum shares the broader ethos of cryptocurrencies, it places a greater emphasis on practicality. Its proponents claim that the intrinsic value of money is closely related to its practical application. Ethereum’s vast array of decentralized applications (dApps) reinforces this idea. These dApps play a vital role in creating value within the Ethereum ecosystem. Since these dApps facilitate various features and services, they contribute to the overall utility of the Ethereum platform. The foundation of support for dApp and smart contract functionality is the Ethereum Virtual Machine (EVM), where all Ethereum accounts reside.
Recently, more and more people are turning to "EVM fatalism" due to interoperability, security, and developer efficiency. Since there is a large ETH developer community behind the EVM standard, more and more protocols are migrating to the Ethereum ecosystem and building bridging mechanisms to promote interoperability. Therefore, real-world applications need to be centered around EVM compatibility to leverage the largest developer community.
Beyond Bitcoin and Ethereum: A Diverse Cryptocurrency Landscape
However, the world of cryptocurrency is much more than these two players, with the broader ecosystem encompassing a range of beliefs and preferences. Take Monero, for example. This cryptocurrency is a haven for those seeking privacy, offering one of the most private transaction systems. In contrast, the Solana blockchain features fast transaction times and scalability, which is a plus for those whose transaction speed is paramount.
All of these schools of thought have merit and are not necessarily in conflict with each other.
L2 Layer: Bridging the Gap
“However, the more cross-chain bridges and applications are used, the more serious the problem becomes… Cross-chain activity has an anti-network effect: if not much happens, it’s fairly safe, but the more something happens, the risk increases. The bigger."
——Vitalik Buterin, Ethereum Foundation
In our current multi-chain crypto ecosystem, market solutions leverage EVM compatibility through bridging mechanisms. However, cross-chain bridging can complicate security issues and centralization risks. Assets in cross-chain bridges are vulnerable to attacks, and increased interconnectedness could lead to system contagion. In contrast, a layer-by-layer approach maintains the integrity of each layer’s security while minimizing interdependencies.
Despite ideological differences, Bitcoin and Ethereum are increasingly likely to come together. Ethereum’s EVM is responsible for powering decentralized applications and can coexist in the Bitcoin space through initiatives such as Botanix. Introducing decentralized EVM sidechains to Bitcoin can create a situation where both can thrive.
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