Talking about Bitcoin's current technology stack debate and trend

Author: laobai, Partner of ABCDE Investment Research

Originally, this post should talk about the trend of derivatives, NFT and NFTFI, but since the BTC ecology is so popular recently, and I have also seen several primary market projects of the BTC ecology recently, let’s just talk about the current entanglement and controversy of BTC. Technology stack and trends.

1. History

To understand things like BRC20 and Ordinal, you have to have a general understanding of their technical and historical background. Here I will briefly introduce them in the most vernacular way. Satoshi Nakamoto first invented Bitcoin as a peer-to-peer cash system. Later, he said on the forum that when Bitcoin grows and develops, it can carry more things on it, such as escrow transactions, bonded contracts, and third-party arbitration. some type of.

But later everyone found that the performance of BTC was too poor, and the price fluctuated greatly, and peer-to-peer cash could not be done, so they slowly moved towards today's "electronic gold" route. Satoshi Nakamoto's original intention and vision also laid the foundation for later expansion. Compete with BCH, BSV fork events.

There is an OP_Return script operation code in Bitcoin, which can stuff 80 bytes of messy things, so someone came up with Colored Coin in 12 years, and used Op_Return to mark some things, so that Bitcoin can be obtained from the same The homogeneity became non-homogeneity, but it was really impossible to do it because of BTC performance problems.

Then there was MasterCoin in 2013 (later OmniLayer, BTC-based USDT was issued here), and CounterParty in 2014 also used this Op_Return to do things. No one uses BTC anymore), one of the co-authors of dyed coins in 2014, who proposed to MasterCoin to upgrade BTC and was ignored, V God made ETH himself in a rage.

Later, there were countless disputes due to the problem of capacity expansion. The most famous ones are undoubtedly BCH and BSV, both of which take the route of large blocks. BCH will gradually become larger, from 1M to 8M, and then 32M. Extreme, directly up to hundreds of M or even a G.

On the BTC side, it is calm and calm. It uses Segwit isolation witness technology to separate signature verification from transactions. The original 1M total data has now become 1M transaction data + 3M witness data, which is a "small expansion" in disguise. Note, Segregated Witness is important! Because behind Ordinal, BRC20 these things all come from here.

2. Problems and current situation

In addition to direct block expansion, BTC’s own technology stack also has many methods, but it is far less popular than ETH. After all, supporting smart contracts and not supporting smart contracts is not in the same latitude in technical complexity and feasibility, but there is a problem. That is, after a hundred years there will be no block rewards (there will be very few after more than 10 years), what about the security of BTC, is it possible to switch to POS for additional issuance? How to stimulate enough on-chain TX is a problem.

Generally speaking, the current exploration directions are as follows: 1. Pure side chain-Liquid Network, this is the alliance chain developed by BlockSteam, which is about 10 times the performance of BTC, mainly for large-amount Bitcoin transfers and transaction settlements of institutions. kind.

2. State Channel - Lightning Network, no need to explain, everyone in the industry knows that it is also the most out-of-the-box technology stack of BTC at present. It is designed for fast payment of small amounts or even micro-payments. Wal-Mart, McDonald's and the like have support , but after a few years the data is really mediocre. There are about 5,000 BTC locked in it, and about 70,000 channels.

3. Disguised side chains - RSK and Stacks, RSK is EVM compatible, and uses the mechanism of joint mining with Bitcoin to produce blocks, Stacks is non-EVM compatible, and has developed a set of Clarity language, using a POX transmission proof to produce blocks. Neither of them really inherit the security or hashing power of BTC, they just look a little bit like it, which is not a concept at all with ETH L2.

4. Client verification - RGB and Taro are relatively new paradigms, which bind the asset issuance under the chain to the UTXO on the chain, but the transaction verification and data storage are on the client side, you only need to use the client side when verifying It is enough for the terminal software to verify the UTXO related to your off-chain assets. It does not need to check the entire network to reach a consensus like traditional blockchains. New is new, but the development is relatively slow, on the contrary, it was seized by Ordinal.

5. Ordinal (including NFT, BRC20, etc.) - This is actually stuffing things into the 3M witness data of Segwit. Before OP_Return could only stuff 80 bytes. Now with Segwit, we can put 3M. Originally, Segwit limited the amount of data in the witness data plug for a single transaction. As a result, the Taproot upgrade at the end of 21 relaxed the requirements and completely removed the restrictions, so you saw BTC NFTs with 3M small pictures, BRC20 and the like.

3. Controversy and the future

The controversy caused by Ordinal is very big, not only among ETH and BTC supporters, but also within BTC. On the one hand, Ordinal has indeed stimulated TX on the chain, and once increased the proportion of fee income from 2% to 74%. Bitcoin is expensive and congested, so miners should not be too happy. On the other hand, many Bitcoin advocates feel that the Bitcoin network is filled with small pictures or useless "inscription garbage", which is not what BTC should be.

So the focus of the debate is actually very simple - how should the 3M data space be used? What would make the most sense to stuff inside? The current and future methods are as follows, but from a technical point of view, they all have their logical flaws (the significance of hype is another matter)

1. NFT - BTC NFT is mainly on a pure chain. Many NFT chains on ETH only store a link to Arweave or IPFS. But if you think about it, is it really that important whether that small picture is on the ETH or BTC chain? At least ETH has fired NFT for the past two years, and no one really cares about it. Small pictures placed in this 3M segregated witness space are really more valuable than those placed on AR or IPFS? A bit far-fetched.

2. BRC20/ORC20/SRC20/BRCXXX - BRC20 has a lot of restrictions and is inconvenient, so everyone came up with ORC20, which is more powerful and flexible, and there is BRCXXX waiting...but the more powerful XRC is in the future In fact, it looks more like ERC, so what are you talking about? Anyway, it does not support smart contracts. No matter how hard BTC is, it is impossible to use it better than ETH and other smart contract-based public chains in terms of functionality.

3. DA - This is developed by Celestia Rollkit. Technically, the DA layer can be thrown into the 3M. The problem is that your DA has no advantage in terms of speed or capacity. ETH is about to be upgraded in Cancun. At that time, there will be a block every 12 seconds, and 1M data will be linked (after two years, the full version of Danksharding can be linked to 16M), 5M per minute, and 50M per 10 minutes. BTC is a block of 3M in 10 minutes, and it has to compete with BRC for space, which is small and expensive.

In short, you find that no matter what you put in it, ETH can do it better. As mentioned earlier, whether there is a difference in the latitude of smart contracts, no matter how much you toss in this 3M space, the ceiling is ETH. You insist that BTC is more OG or safer than ETH, right? It’s not impossible. The question is, do you really need to increase the security level from ETH to BTC? What's more, after ETH is transferred to POS, there are two opinions about who is safer with BTC...

Finally, let me talk about the new applications of BTC that I have seen so far, both in the primary and secondary markets.

1. Time stamp server - This is what Babylon of the Cosmos ecology is doing. It uses BTC as a time stamp server to help POS chains prevent long-range attacks. It can be regarded as "borrowing" the security of Bitcoin to serve some POS chains. But this is just an enhancement, not a complete replacement of these POS's own verification and consensus mechanisms.

2. DA - It has been mentioned above, so I won’t repeat it

3. EVM Compatibility/Equivalent - In fact, RSK is also EVM compatible, but it has not been done well. The joint mining mechanism is now "not very advanced". At present, some new projects are being explored in the primary market In this direction, there is a method similar to ETH to pledge BTC to become a node to do EVM equivalent, and fork OP and then use some form of BVM to realize "BTC-based Optimisic Rollup".

4. Zk+BTC - This is what ZeroSync is doing, in a Public Good style. Generate ZK proofs for the Bitcoin network through ZK-STARK, and instantly verify the latest status of the blockchain, without spending hours or even days to synchronize all the history of all BTCs. At present, proofs of block headers and transaction data can be achieved. Proofs of signed messages are still under development.

In short, the BTC ecology is a particularly tangled ecology. On the one hand, once something new comes out, it can indeed be speculated. After all, it is the originator of the blockchain. On the other hand, many things cannot stand the scrutiny of technology and the test of time. It's a bit like the earliest Ford cars. They all have turbochargers or even hybrids. With pure electric technology, you can expand the cylinder at most to increase the displacement. It really can't catch up.

But decades later, BTC’s security issues and computing power are also real concerns. It is really necessary to quickly find a direction to use this 3M witness space to stimulate the generation of TX on the chain. The most ideal is some native BTC, which is not available in other ecology, or the most suitable for BTC, but it is logically found that no matter what direction it seems, ETH can do it, and it can do it better, entangled...