Why Bitcoin Smart Contracts Avoid Shared Memory

Ethereum's global state allows contracts to call and mutate each other's storage, creating unpredictable attack vectors. The $60M DAO hack was a direct result of re-entrancy in a shared state environment.\n- Single point of failure can cascade across the entire application layer.\n- Infinite composability loops create un-auditable complexity, leading to exploits like those on Compound or Aave.

Bitcoin contracts (scripts) only validate the spending of a specific, immutable UTXO. They cannot read or write to a global state or call other scripts directly.\n- Deterministic execution: A script's success/failure depends solely on its input arguments and the UTXO's data.\n- No external calls: Eliminates re-entrancy by design, making contracts like those on Liquid Network or via RGB inherently isolated.

Complex applications must be built via protocol layers, not smart contract calls. This shifts complexity to cryptographic protocols like client-side validation and covenants.\n- RGB Protocol assets are isolated in their own client-validated histories.\n- Recursive covenants (e.g., OP_CTV) enable deferred spending logic without shared state, a pattern explored by BitVM for optimistic rollups.

Bitcoin's model prioritizes the security of the base layer above all else. This creates a higher barrier for developers but results in a $1T+ asset that has never been hacked at the consensus level.\n- Systemic risk is contained: A bug in a Bitcoin script cannot drain unrelated wallets or contracts.\n- Innovation is pushed upward: Forces scalability and complex logic into separate layers (e.g., Lightning Network, Stacks), insulating the base chain.

EVM-style shared memory creates contention, where every transaction must sequentially update a single global state. This limits throughput to ~15-30 TPS and creates a gas auction for block space.

• Contention: Parallel execution is impossible.
• Cost: Global state updates are expensive for all users.
• Complexity: Requires complex fee markets and mempool logic.

Bitcoin's model treats each Unspent Transaction Output (UTXO) as an independent state object. Contracts (via Script) validate against specific inputs, enabling massive parallel validation.

• Parallelism: Validators can process unrelated UTXOs simultaneously.
• Determinism: Validation is local to the transaction's inputs, not a global database.
• Simplicity: Eliminates need for a global gas meter or complex state trie.

Projects like RGB and Taro push contract logic entirely off-chain. The blockchain becomes a commitment layer, while state transitions are enforced by wallets via cryptographic proofs.

• Scalability: State is held by interested parties, not all nodes.
• Privacy: Contract details are not broadcast on-chain.
• Complexity Trade-off: Shifts burden to client software and requires robust data availability solutions.

Avoiding shared memory sacrifices the seamless composability of DeFi 'money legos' seen on Ethereum or Solana. Each UTXO-based contract is a sovereign system.

• Composability Loss: No direct, atomic calls between independent contracts.
• Sovereignty Gain: No risk of a single contract failure cascading through the system.
• Innovation Path: Forces new patterns like discreet log contracts (DLCs) and state channels.

Smart contracts on Bitcoin verify the existence and spending conditions of specific UTXOs, not the current value of a shared variable. This is the core of Lightning Network channels and DLCs.

• Verification: Contracts check Merkle proofs of transaction inclusion.
• Enforcement: Logic is about who can spend a specific output under what conditions.
• Result: Enables trust-minimized swaps, oracles, and derivatives without a shared runtime.

Layers like Stacks (Clarity) and Rootstock (EVM sidechain) reintroduce shared state off-chain or in a federated sidechain, using Bitcoin purely for final settlement. This is a hybrid approach.

• Sidechain/Rollup: Shared state exists in a separate execution layer.
• Settlement: Disputes or batch proofs are settled on Bitcoin's base layer.
• Risk Profile: Introduces new trust assumptions (federations, watchtowers) but enables EVM-like developer experience.

Shared, mutable state (like Ethereum's global state) creates a single point of failure and contention. Every transaction must be validated against the entire world state, leading to O(n) complexity for nodes and creating attack surfaces for reentrancy and state corruption bugs that have drained $1B+ in exploits.

Bitcoin's UTXO model treats each output as an independent, immutable contract. Transactions don't reference a global state; they cryptographically prove ownership of specific, historical outputs. This enables:\n- Deterministic Parallel Validation: Nodes can verify unrelated transactions simultaneously.\n- Censorship Resistance: No actor can freeze or corrupt another user's "state".\n- Simplified Light Clients: Verification requires only block headers and Merkle proofs.

Forget the DeFi "money legos" of Ethereum. Bitcoin smart contracts (via Taproot, BitVM) are sovereign circuits. They are self-contained agreements between specific parties, enforced by Bitcoin's consensus. This trades the frictionless composability of Uniswap or Aave for bulletproof finality and predictable gas costs that don't spike with network congestion.

Without shared memory, you cannot have a global, mutable smart contract. This eliminates entire application categories (e.g., on-chain order book DEXs) but creates space for robust alternatives. Builders must leverage:\n- Client-Side Validation: As seen in RGB Protocol and Lightning Network.\n- Oracle & Bridge Dependence: For external data, requiring secure designs like BitVM's fraud proofs.\n- Off-Chain Logic: Complex state is managed off-chain, settled on-chain.