Bitcoin Scaling Breaks Full Verification

As block size or frequency increases, the hardware requirements for a full node become prohibitive. This centralizes validation to a few entities, undermining Bitcoin's core security model.

• Storage: A 1TB+ blockchain excludes users with consumer hardware.
• Bandwidth: Downloading 1MB blocks every 10 minutes is trivial; downloading 100MB blocks is not.
• CPU: Verifying massive blocks in real-time requires enterprise-grade hardware.

Push computation and state off the base layer. Protocols like the Lightning Network and sidechains (e.g., Liquid Network) handle transactions off-chain, settling periodically to Bitcoin.

• Lightning: Enables ~1M TPS with instant finality by using payment channels.
• Liquid: Offers ~2 min block times and confidential transactions for traders.
• Trade-off: Users must trust a federation (Liquid) or monitor channels (Lightning), introducing new trust assumptions.

SPV clients verify transactions without downloading the full chain, relying on Merkle proofs from full nodes. This is the model used by most mobile wallets.

• Benefit: Enables lightweight wallets with minimal storage and bandwidth.
• Risk: Security depends on the honesty of connected full nodes; vulnerable to eclipse attacks.
• Reality: Most users already accept this trade-off for daily usability, sacrificing some sovereignty for scalability.

Proposals like Drivechains (BIP 300) allow for pegged sidechains with Bitcoin as the base settlement layer. They offer an escape valve for innovation without bloating L1.

• Mechanism: Two-way peg secured by Bitcoin miners, a more decentralized model than federations.
• Use Case: Enables experimental features (e.g., EVM-compatible sidechains) without L1 consensus changes.
• Controversy: Critics argue it introduces new systemic risks and miner centralization pressure.

Even with large blocks, geographic and political censorship can break verification. Blockstream Satellite broadcasts the blockchain globally via geostationary satellites.

• Purpose: Ensures permissionless access to the ledger, a prerequisite for verification.
• Scale: Covers ~90% of Earth's populated landmass, independent of local ISPs.
• Irony: Uses centralized infrastructure (satellites) to reinforce network decentralization.

The end-state of sacrificing verification is full custodianship. Exchanges like Coinbase and Binance handle billions in Bitcoin transactions off-chain, offering instant, free internal transfers.

• Throughput: Effectively infinite TPS within their closed system.
• Cost: Users surrender private keys, accepting counterparty risk and regulatory exposure.
• Reality: This is the dominant 'scaling solution' by volume today, proving the market's willingness to abandon verification for utility.

Light clients and bridges shift the security burden from PoW miners to a shrinking set of full nodes. The system's integrity now depends on the liveness and honesty of these nodes, not just hash power.\n- Attack Vector: Eclipse attacks and data withholding target the few authoritative data sources.\n- Trust Assumption: Users must trust that the node they query isn't lying by omission.

Unlike Ethereum's EVM, Bitcoin's UTXO model and lack of a generalized state transition function make succinct fraud proofs (like Optimistic Rollups) nearly impossible to implement. Scaling solutions must rely on other mechanisms.\n- Result: Systems like Lightning Network use punishment-based security (revocable sequences).\n- Alternative: Drivechains and sidechains like Stacks fall back to federations or separate consensus.

Even with a valid cryptographic proof, you need the underlying transaction data to verify it. Rollups on Bitcoin face the same DA problem as elsewhere, but without a robust peer-to-peer mempool for blob propagation.\n- Consequence: Forces reliance on centralized sequencers or small DA committees.\n- Comparison: Contrast with Celestia or Ethereum's Proto-Danksharding, which are built for this.

Moving assets to L2s or sidechains requires a bridge, which becomes a $1B+ honeypot. The security model shifts from Bitcoin's PoW to the bridge's multisig or validator set. This is the single greatest point of failure.\n- Example: The Polygon Avail bridge hack demonstrated this risk.\n- Architect's Choice: Decide between a large, decentralized validator set (slow) or a small, fast federation (risky).

A Bitcoin sovereign rollup (using its chain for data) doesn't inherit Bitcoin's settlement security. Disputes are resolved by the rollup's own validator community, not Bitcoin miners. This creates a new sovereignty layer with its own social consensus.\n- Implication: It's a sidechain with better data guarantees, not a true L2.\n- Trade-off: Gains maximal flexibility but abandons Bitcoin's finality for its own fork choice rule.

Bitcoin's UTXO model is excellent for verification but terrible for complex state. Each scaling solution must build its own state model on top, adding overhead and fragmentation. This is why Ethereum-style scaling (hundreds of dApps in one VM) is not possible.\n- Result: Scaling is application-specific (Lightning for payments, RGB for assets).\n- Cost: Developer experience suffers; no composable ecosystem emerges on a single layer.