Scaling Bitcoin Without Consensus Changes

Bitcoin's ~7 TPS and ~10-minute block times are a feature for decentralization, but a bug for applications. This creates a $100B+ opportunity for scaling solutions that inherit security without requiring a hard fork.

• Congestion Fees: Simple transfers can cost $10+ during peak demand.
• Programmability Gap: Limits DeFi and smart contracts to alt-L1s like Ethereum and Solana.

Projects like BitVM and Rollkit enable a Bitcoin L2 to enforce its own rules, posting only fraud proofs or validity proofs to the base chain. This is the most decentralized scaling path.

• Security Inheritance: Disputes are settled on Bitcoin, leveraging its >$1T security budget.
• EVM Compatibility: Enables porting of Uniswap, Aave and the entire Ethereum toolchain.

Stacks and Rootstock (RSK) operate as independent chains but use Bitcoin as a final settlement layer, often via a federated peg or merged mining. They offer full smart contracts today.

• Proven Throughput: Stacks achieves ~50 TPS with its Clarity VM.
• Capital Efficiency: Native two-way bridges like sBTC aim for 1:1 Bitcoin-backed assets.

Lightning Network is the canonical payment channel network (state channels). Newer entrants like Citrea (ZK Rollup) and Chainway (proof-of-liability) are bringing generalized scaling. ZK proofs provide instant finality.

• Instant Finality: ZK Rollups offer ~1-5 second settlement assurances.
• Capital Efficiency: Lightning enables millions of TPS for micro-payments off-chain.

Architecture determines the security-assumption spectrum. Sidechains (e.g., Liquid Network) use a federation for speed but introduce trusted custodians. Rollups minimize trust but are more complex to build.

• Trust Minimization: Rollups > Sidechains > Federated Bridges.
• Time-to-Market: Sidechains (Now) > Rollups (2024-25).

No single solution will 'win'. The ecosystem will be a heterogeneous mix of rollups, sidechains, and payment channels, similar to Ethereum's L2 landscape. Interoperability via bridges like Polyhedra will be critical.

• Modular Specialization: Different L2s for payments, DeFi, and gaming.
• Aggregated Security: Total value secured across all L2s could 10x Bitcoin's native TVL.

The Problem: Bitcoin cannot natively execute complex smart contracts. The Solution: A separate Proof-of-Transfer (PoX) blockchain that settles finality to Bitcoin. It enables DeFi and NFTs with Bitcoin as the base asset.

• Clarity language for predictable, secure smart contracts.
• sBTC for a decentralized, programmable Bitcoin wrapper.
• ~10s block time for faster execution.

The Problem: Developers want to port Ethereum dApps to Bitcoin's security. The Solution: A merge-mined sidechain that brings the EVM to Bitcoin, secured by >50% of Bitcoin's hashrate.

• 2-way peg with federated security, moving towards decentralized bridges.
• ~30s block time, ~10k TPS with upcoming upgrades.
• Native RIF DeFi ecosystem for payments and identity.

The Problem: Slow, public Bitcoin transfers hinder trading and confidential transactions. The Solution: A federated sidechain for fast, confidential transactions and asset issuance, governed by a multi-sig federation of exchanges and institutions.

• Confidential Transactions hide amounts.
• 2-minute block time for rapid settlement.
• Issues L-BTC, L-USDT, and other digital assets.

The Problem: Adding expressive computation to Bitcoin without a soft fork. The Solution: A virtual machine that executes complex logic off-chain, with fraud proofs and challenges settled on Bitcoin L1. Inspired by Optimistic Rollups.

• Enables bridges, prediction markets, and games.
• Bitcoin L1 as the ultimate judge.
• Early-stage, high-complexity proofs.

The Problem: Bitcoin's base layer is too slow and expensive for micro-payments. The Solution: A network of bidirectional payment channels enabling instant, high-volume, low-fee transactions off-chain.

• ~1B+ sats capacity across the public network.
• Sub-second finality for payments.
• Enables streaming sats and atomic multi-path payments.

The Problem: Monolithic development is slow; Bitcoin needs specialized, upgradeable modules. The Solution: Proposals like Drivechains (BIPs 300/301) enable the creation of pegged sidechains with blinded merge mining, allowing for experimentation without L1 risk.

• Soft fork required, but minimalistic.
• Enables sovereign innovation (privacy, DeFi) on sidechains.
• Contrast with federated models like Liquid.

Bitcoin's ~7 TPS limit creates a fee market where simple transfers compete with complex DeFi, pricing out utility.\n- On-chain fees can spike to $50+ during mempool congestion.\n- Settlement finality is slow, taking ~60 minutes for high confidence.

Move transactions off-chain, using Bitcoin only for periodic settlement and security.\n- Lightning Network enables ~1M TPS potential with ~$0.001 fees and ~1s finality.\n- Stacks (sBTC) brings smart contracts via a Bitcoin-secured L2, unlocking DeFi and NFTs.

Bitcoin Script is intentionally not Turing-complete, preventing the complex logic needed for modern DeFi, DEXs, and lending.\n- Native programmability is restricted to basic multi-sig and timelocks.\n- This has historically ceded all DeFi innovation to Ethereum and other alt-L1s.

Parallel chains with two-way pegs or novel proof systems inherit Bitcoin's security for expanded functionality.\n- Rootstock (RSK) merges-mines with Bitcoin, offering EVM-compatibility and ~20s block times.\n- Drivechains (proposed) would allow alt-peg sidechains to be secured by Bitcoin miners.

Even with L2s, the base chain must store proof and state data, creating a long-term data bloat and throughput bottleneck.\n- Every scaling solution eventually hits Bitcoin's ~4MB block weight limit.\n- This limits the number of concurrent L2 channels or rollup batches.

Use cryptographic proofs to compress transaction data before settling on-chain.\n- Zero-Knowledge Rollups (e.g., BitVM 2) can verify complex computation with a ~1KB proof.\n- Optimistic Rollups (conceptually) assume validity, using fraud proofs and a 7-day challenge window for security.