New Exploration of Bitcoin Ecosystem Programmability

Bitcoin, as the most liquid and secure blockchain network, is attracting more and more developers' attention to its Programmability and scalability issues. With the rise of inscription technology, the Bitcoin ecosystem has ushered in new development opportunities. Developers are exploring various innovative solutions, such as zero-knowledge proofs, data availability, sidechains, rollups, and re-staking technologies, to enhance the functionality and scalability of the Bitcoin network.

However, the Bitcoin network itself has some limitations that make it difficult to directly support smart contracts like Ethereum.

1. The scripting language of Bitcoin is limited in Turing completeness for security reasons.
2. The storage structure of the Bitcoin blockchain is primarily designed for simple transactions and has not been optimized for complex smart contracts.
3. Bitcoin lacks the virtual machine environment required to execute smart contracts.

Despite this, the Bitcoin network has been continuously upgraded and improved in recent years. The SegWit upgrade in 2017 increased the block size limit, and the Taproot upgrade in 2021 made batch signature verification possible, all of which created conditions for the Programmability of Bitcoin.

In 2022, a developer proposed the "Ordinal Theory", which describes a scheme for numbering satoshis (the smallest unit of Bitcoin), making it possible to embed any data such as images in Bitcoin transactions. This opens up new avenues for directly embedding state information and metadata on the Bitcoin chain, providing new ideas for applications that need to access and verify state data.

Currently, most projects enhancing the Programmability of Bitcoin are implemented based on Layer 2 networks (L2). However, this approach requires users to trust cross-chain bridges, which becomes a significant barrier for L2 to acquire users and liquidity. In addition, Bitcoin lacks a native virtual machine or Programmability, making it difficult to achieve communication between L2 and L1 without additional trust assumptions.

To address these issues, some projects attempt to enhance Bitcoin's programmability based on its native attributes. RGB, RGB++, and Arch Network are representatives among them:

1. RGB is a smart contract solution validated through off-chain clients, recording contract state changes in Bitcoin's UTXO. Although it has certain privacy advantages, it is relatively complex to use and lacks contract Programmability, resulting in slow development currently.

2. RGB++ has made improvements based on RGB, still based on UTXO binding, but by treating the chain itself as a consensus-based client validator, it provides a solution for metadata asset cross-chain transactions and supports asset transfers across any UTXO-structured chain.

3. Arch Network provides a native smart contract solution for Bitcoin, creating a zero-knowledge virtual machine and corresponding validator node network, recording state changes and asset stages in Bitcoin transactions through aggregated transactions.

These solutions each have their own characteristics, but they all continue the idea of binding UTXO. The one-time-use feature of UTXO is more suitable for recording the state of smart contracts. However, these solutions also face issues such as poor user experience, long confirmation delays, and low performance. Although they have expanded functionality, they have not significantly improved performance.

As more developers join the Bitcoin community, we can expect to see more innovative scaling solutions. For example, the op-cat upgrade proposal is currently under active discussion. Solutions that align with Bitcoin's native attributes are particularly worth noting. Without upgrading the Bitcoin network, the UTXO binding method is the most effective way to expand Bitcoin's Programmability. As long as user experience issues can be addressed, this will bring significant breakthroughs to the development of Bitcoin smart contracts.