The Good Tech Companies - The Bitcoin Renaissance: Addressing Risks, Embracing Change, and Upholding Core Tenets

Episode Date: May 10, 2024

This story was originally published on HackerNoon at: https://hackernoon.com/the-bitcoin-renaissance-addressing-risks-embracing-change-and-upholding-core-tenets. How to advance Bitcoin into what the market clearly wants it to be—without compromising on any of its cherished ideals. Check more stories related to web3 at: https://hackernoon.com/c/web3. You can also check exclusive content about #bitcoin, #bitcoin-spotlight, #nervos-ckb, #ckb, #bitcoin-renaissance, #cryptocurrency-adoption, #programmable-bitcoin, #good-company, and more. This story was written by: @ckb. Learn more about this writer by checking @ckb's about page, and for more stories, please visit hackernoon.com. Bitcoin's growth demands innovative solutions while preserving its core principles. The community seeks to bridge scalability, programmability, and security, ushering in a Bitcoin Renaissance with a layered approach and decentralized technologies.

This audio is presented by Hacker Noon, where anyone can learn anything about any technology. The Bitcoin Renaissance. Addressing risks, embracing change, and upholding core tenets. By Nervous CKB. While Bitcoin has achieved a formidable status as a store of value, the rise of ordinals and inscriptions clearly demonstrated users want to use it for moreth and just that. Beyond simply holding, there's a massive and rising demand for Bitcoin-based applications, fungible and non-fungible assets, and scalable payments. However, the question is, how does Bitcoin satisfy this desire while preserving the core principles it was based on, the risks of inaction? There has been great progress

made gradually in the Bitcoin ecosystem, but the inability to innovate quickly has led to a concerning trend. A significant amount of BTC is continually being siphoned away from its ecosystem. Despite Lightning Network's relative success, Ethereum now hosts more BTC than all Bitcoin Layer 2s combined. Even worse, an increasing number of BTC are held on centralized exchanges, which reintroduces the same custody risks from the fiat system that Bitcoin was originally built to mitigate. This is a clear signal that if we, the Bitcoin community, don't offer compelling solutions, others will step in with solutions that may not align with Bitcoin-a-score values of

decentralization and security. If we don't act, we risk losing control over the direction in which Bitcoin and the broader crypto industry evolve. To that point, Ethereum's history provides a cautionary tale. As early as 2016, Bitcoin developers Peter Todd and Greg Maxwell highlighted numerous architectural issues with its design. However, the Bitcoin ecosystem's progress over the past eight years has been relatively slow, while the broader industry has pursued questionable new solutions like proof-of-stake, account-based models, and sharding, all of which can undermine the decentralization and security that Bitcoin stands for. We can no longer afford to make the same mistakes. The demand for new Bitcoin-based assets and use cases presents a pivotal opportunity. It calls for a Bitcoin

renaissance. Let's seize this moment to redirect the crypto industry towards a path that adheres to Bitcoin's values, principles, and architecture. The state of play. At its core, Bitcoin was envisioned as a peer-to-peer electronic cash system, not a peer-to-contract system like most smart contract platforms, or a peer-to-sequencer system like current rollups. Bitcoin's brilliance lies in the proof-of-work consensus mechanism in the UTXO model, which offers numerous advantages over the now-prevalent account-based model. Instead of recording balances, UTXOs track individual currency units, similar to how physical cash works. This enables the creation of genuine bearer assets,

assets owned by whoever holds the private key. Most importantly, Bitcoin's emphasis is on verification, not computation, which is what blockchains excel at. Computation and complex verification should be pushed off-chain, into protocols that don't necessarily need to be blockchains. Luckily, the Bitcoin community has proposed many novel ideas for how to do this. Peter Todd's work on single-use seals is especially notable here, as it paves the way for innovative scaling solutions based on client-side validation, including colored coins, RGB, ordinals, and atomicals. The community has also explored and built various layered 2 solutions with

different consensus mechanisms, bridging solutions, and security assumptions. However, despite the richness of the ideas, the ecosystem growth over the years has been slow. This is primarily due to two reasons. Bitcoin's lack of programmability, and its conservative ethos. It's, intentionally, very difficult to reach a social consensus on any protocol-level changes to Bitcoin, which I salsow why we're having these conversations today. Ushering in the Bitcoin Renaissance If we ought to usher in a Bitcoin Renaissance, we should have the following in mind. Our solutions must satisfy users' needs without sacrificing Bitcoin's values and without requiring

soft or hard forks. Luckily, this is all possible by leveraging the layered approach. We already have some asset issuance protocols, including Ordinals, Runes, BRC20, and Taproot assets on the basechain. These directly benefit and simultaneously contribute to Bitcoin's unmatched security. However, Bitcoin's limited programmability means that users can't do much with these assets beyond simply holding them, which is why we need a fully expressive programmable layer on top. This layer should serve as the financial hub for assets on the Bitcoin chain. Then, we need a secure bridge between these two layers. We can use a typical two-way peg,

but Cypher Wangs, author of the RGB++ protocol, new innovative solution, universal isomorphic binding, UIB, is better. It employs point-to-point mapping between the UTXOs of two chains, eliminating the need for third-trusted parties, which is a giant leap compared to current bridging solutions. Once we've established the programmable layer and the bridge, we can build another scalability and privacy-focused layer on top. Solutions for this include a client-side validation-based protocols, open, partially signed, transactions, Nostr, Chami and eCash, and peer-to-peer markets. Then, we can use channels to connect all of this, and even connect Web2 and Web3, birthing the new Bitcoin-based Web5 paradigm. Web5 means using cryptography, peer-to-peer technology, and other Web3 native solutions

to fix and incorporate into Web2. It's an entirely different paradigm than the one we're operating in today, and there's no better platform to build ITON than Bitcoin. Info by Jan Schia, Chief Architect of Nervous, Founder of Cryptape. This article is based on Jan Schia's talk at Bitcoin Singapore on March 9, 2024. Click for slides. Thank you for listening to this Hackernoon story, read by Artificial Intelligence. Visit hackernoon.com to read, write, learn and publish.