For quite some time, the cryptocurrency ecosystem can be quickly summarized this way: you use Bitcoin to spend and store value, but you build apps that can increase this value on the Ethereum blockchain. But this year, several developers working on Bitcoin have launched breakthrough after breakthrough that would allow Bitcoin to also be the blockchain that you can use to build apps. While new features such as Ordinals and BRC-20 have gotten most of the spotlight, the Web3 movement that is working to increase Bitcoin’s utility is bigger than you think. But before we talk about these relatively unsung heroes of Bitcoin, let’s discuss briefly how all of these changes became possible.
How Bitcoin Turned into a Smart Contract Blockchain
Many people have a misconception that Bitcoin does not have smart contracts. In fact, Web3 developers have been attempting to add smart contract capabilities to Bitcoin, but the way the Bitcoin blockchain was built made it more difficult to do so, unlike smart contract-ready blockchains like Ethereum. Bitcoin’s programming language, called Script, is not Turing-complete, which is to say that it can’t solve all computational problems, while other blockchains are Turing-complete. As a result, Bitcoin's smart contracts have been more rudimentary and limited, suitable for simpler applications like multisig transactions and time-locked transactions, such as atomic swaps.
This scenario has started to change since the Taproot upgrade on the Bitcoin blockchain was activated in November 2021. Taproot is expected to boost the Bitcoin network’s functionality to facilitate fast and reliable transactions. Prior to Taproot, the Bitcoin protocol was still working on Layer-1 developments while other blockchains like Ethereum had already gotten a head start in Layer-2 and decentralized apps (DApps). After Taproot, several Web3 developers have started building on top of Bitcoin to introduce sidechains, drivechains, and even Layer-1 and Layer-2 second-layer solutions. Building on Bitcoin as a base layer for decentralized finance (DeFi), payments, and non-fungible tokens (NFT) will put Bitcoin to even greater levels of visibility and adoption.
This year, Ordinals introduced a new method for creating digital assets inscribed on satoshis, essentially turning them into NFTs, while the BRC-20 token protocol started drawing comparisons to Ethereum’s ERC-20. The success of the Ordinal/BRC20 boom is built on top of Taproot upgrade. Ordinal introduced the idea of Inscriptions, or the process to connect sats with arbitrary content. Inscription content is entirely on-chain and stored in taproot script-path spend scripts. Taproot scripts have very few restrictions on their content and additionally receive the witness discount, making inscription content storage relatively economical.
In our previous article about the rise of Bitcoin as a smart contract-ready blockchain, we compared Ethereum to a smartphone operating system that is capable of supporting different applications, while pre-Taproot Bitcoin apps are more similar to the calculator function on cash registers. In essence, Taproot has upgraded this basic calculator to a more advanced version, perhaps like a programmable scientific calculator, but there still remains the major challenge of upgrading it to the mobile OS level where Ethereum is at.
Nevertheless, even before Taproot, many Web3 developers have been hard at work in shaping Bitcoin’s future as more than just its reputation as the world’s most valuable cryptocurrency. These are some of the projects that are creating new solutions that add major use cases to the Bitcoin blockchain.
Validity Proof from ZeroSync
For years, researchers have been working on bringing zero-knowledge proofs or validity proofs to Bitcoin (BTC). The latest work on validity proof is from ZeroSync. Based in Zug, Switzerland, the ZeroSync Association is a non-profit entity. They are the pioneers in the field of Bitcoin scalability, interoperability and privacy. ZeroSync published the latest report of our research on introducing validity proofs to Bitcoin. Validity proofs allow users to validate the state of the network without the need to download hundreds of gigabytes of blockchain history or trusting a third party.
The ZeroSync Association stated in the report that “We implemented a sophisticated prototype and our benchmarks indicate that a full chain state proof is computationally feasible indeed.”This could have a profound effect on how Bitcoin users interact with the network, because users can better protect their privacy with more advanced validity proof systems that will make transactions 100x faster.
Perhaps the most exciting idea introduced by ZeroSync is zkCoins. It is a client-side validation protocol combined with Zero-Knowledge Succinct Non-interactive Argument of Knowledge (zkSNARKs) method of establishing proof of ownership. ZkCoins have the potential to significantly enhance the confidentiality and speed of transactions. In combination with future Bitcoin features such as the blockchain-oriented language Simplicity, zkCoins will have strong synergies with the Liquid network, a Layer-2 solution that makes it possible to issue and settle digital assets on top of the Bitcoin blockchain.
Rollkit
**Rollkit **is a new framework developed by Celestia, a project looking to modularize the different components of a blockchain. Rollkit is designed to support sovereign rollups, or scaling systems that make a slow blockchain faster and cheaper, on Bitcoin. Rollkit is opening the door for developers to create rollups with arbitrary execution environments that inherit Bitcoin’s data availability guarantees and re-org resistance.
With this new integration, it is now possible to run the Ethereum Virtual Machine EVM on Bitcoin as a Rollkit sovereign rollup. Sovereign rollups on Bitcoin not only expand the possibilities for rollups, but also have the potential to help bootstrap a healthy blockspace fee market on Bitcoin, enabling a more sustainable security budget. An early research implementation allows Rollkit rollups to use Bitcoin for data availability. Sovereign rollups using Bitcoin for data availability are now a reality with Rollkit’s new early research integration.
You can check this demo of the EVM running on Bitcoin as a sovereign Rollkit rollup.
Stacks
Stacks is an open-source, Layer-1 blockchain that connects to the Bitcoin network, allowing users to build smart contracts and DApps. It connects to Bitcoin through the proof-of-transfer (PoX)consensus mechanism where Stacks miners pay Bitcoin to mint new Stacks coins (STX). Stacks leverage Bitcoin’s security and brings smart contracts to the Bitcoin network. The smart contracts are created using a programming language known as Clarity.
The ultimate goal of all this is to enable the vision of Web3, building a decentralized economy and enabling true user ownership of assets and data, on top of Bitcoin as a settlement layer, and using Bitcoin as a base for decentralized money.
Rootstock
Rootstock (RSK) is a sidechain platform that brings smart contract functionality to the Bitcoin network, allowing developers to build and deploy decentralized applications using Solidity, similar to Ethereum. It aims to enhance Bitcoin's capabilities and provide faster transactions with lower fees, while maintaining a strong connection to the Bitcoin blockchain through merge-mining and two-way peg mechanisms.
The RSK platform is compatible with the Ethereum Virtual Machine (EVM), allowing developers to write and deploy smart contracts using Solidity, the same programming language used in Ethereum. This compatibility makes it easier for developers familiar with Ethereum to transition to RSK and leverage their existing skills and tools.
In Conclusion
While Bitcoin itself may not have fully implemented expressive smart contracts on its base layer, there are currently numerous projects that are leveraging Bitcoin and aiming to achieve this objective through the utilization of sidechains, drivechains, Layer-2 solutions, and even new Layer-1 protocols. By building upon Bitcoin as a foundational layer for DeFi, payments, and NFTs, Bitcoin's visibility and adoption can be elevated to new heights, thanks to the several Web3 developers that make this possible.
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