Between ETF approvals, all-time-highs, and an array of new use cases arriving in the form of Ordinals, BRC20 tokens, and Runes, 2024 has firmly established itself as a feel-good year of growth, development, and recognition in the minds of investors and enthusiasts across the Web3 space. Nonetheless, 2024 has ushered in its fair share of challenges as well — in particular, those concerning Bitcoin and its future role in the global financial arena. While pundits and advocates are celebrating BTC’s arrival on the balance sheets of global financial institutions and funds, leading Web3 development teams remain hard at work paving the way for Bitcoin to continue its ascent. Simply put, the quest for efficient scaling solutions has never been more pressing, as Bitcoin’s transaction throughput has become its primary limiting factor.
At zkBTC, the mission to scale Bitcoin has just as much to do with its future as it does with its past. Although the recent introduction of BRC20 tokens, Ordinals, and Runes has caused major upticks in transaction volume and fees, the conversation surrounding Bitcoin’s scalability has been active, heated, and controversial since the network’s earliest days. Designing and implementing a truly high-performance, smart contract-compatible layer for Bitcoin’s future demands a full understanding of the sequence of events that led the Bitcoin community to where it is today.
The Prospect of Scalability: Early Proposals
Few are familiar with the true origins of Bitcoin’s scalability debate, which date back to 2009 when Satoshi Nakamoto implemented a 1 MB limit on block size within Bitcoin’s codebase to prevent spam attacks. From this moment, block size became the key variable in all conversations concerning scalability.
In 2010, Bitcoin Core developer Jeff Garzik suggested removing the block size limit entirely, only to see his suggestion declined by Satoshi himself. While removing block limits would allow for large volumes of transactions to be processed rapidly and maximize efficiency on the network, Satoshi reasoned that larger block sizes would diminish security and render the network susceptible to malicious attacks. Subsequently, backwards-compatible code optimizations called soft forks became a source of major debate in the Bitcoin community, as most individuals either took the side of security maximalism or enhanced scalability.
In 2015, Bitcoin Core developers Gavin Andresen and Mike Hearn first proposed to increase the block size to an aggressive 20 MB, later reduced their proposal to 8 MB, and still failed to win over necessary support from the Bitcoin community. It was not until 2017, when a successful software fork called Segregated Witness (SegWit) was successfully integrated to enhance the capacity of a Bitcoin block by restructuring its transaction data. SegWit represented a moderate improvement, but despite numerous proposals, the Bitcoin community largely remained in a deadlock, with scalability unsolved and fees often reaching several dollars per transaction.
Hard Forks for a Divided Community
As the entire Web3 space received major influxes of capital and mass market attention in 2017, latency and transaction fees rose to all-time-highs, serving as a source of major criticism for Bitcoin and its future prospects in global finance.
With the Bitcoin community divided on scalability, a new type of code modification emerged: a hard fork. Unlike soft forks, hard forks are not backwards-compatible, and lead to the creation of an entirely new blockchain with altered rules. Ultimately, heightened tensions in the Bitcoin community led to a number of hard forks, with new blockchain projects Bitcoin Cash, Bitcoin Gold, and Bitcoin SV starting up with new block sizes and consensus mechanics of their own. While none was ever able to successfully challenge nor replace the OG itself, 2017’s Bitcoin hard forks shined a light on the division in the Bitcoin community and demonstrated an urgent need for a sound scalability solution that could satisfy both parties.
Lightning Network: A Paradigm Shift in Bitcoin Scalability
Remaining under the radar behind heated forking debates, Tadge Dryja and Joseph Poon introduced an innovative scalability solution called Lightning Network as early as 2015. Officially integrated in 2018, Lightning Network allows for transactions to be processed off the main Bitcoin blockchain, significantly increasing transaction throughput and reducing costs without requiring all-too-controversial code modifications. Lightning Network essentially introduced the concept of Layer 2 scalability before it arrived on Ethereum several years later to support gas-intensive dApps. When El Salvador adopted Bitcoin as legal tender in June 2021, the Bitcoin Beach project in El Zonte played a pioneering role utilizing a Lightning Network-based wallet to support daily micro-transactions.
While Lightning Network remains active today, a number of challenges such as transaction fee variability, node susceptibility, and price volatility pose ongoing challenges. Nonetheless, Lightning Network’s integration marked a pivotal shift in Bitcoin’s scalability debate by demonstrating that mass market scalability can be achieved without forcing controversial code modifications through a diverse community of strong-willed individuals.
Ordinals, Runes, and BRC20s: Why the Future of Bitcoin Scaling is Now
Following the activation of the Taproot upgrade in November 2021, the Bitcoin network realized major advancements in scalability, privacy, and security, paving the way for innovative technologies and new use cases. Today, the ever-popular and growing Ordinals, Runes, and BRC20 token communities speak not only to the impact of those advanced network functions, but of the growing market demand for new applications and innovation on Bitcoin. Already, Bitcoin’s 2024 transaction volumes and fees have reignited the scalability debate once again, with many seeking a solution to settle the score once and for all.
Future Prospects and Scaling Solutions
Fortunately, unlike in previous iterations of the Bitcoin scalability dilemma, today there are significant relevant case studies to refer to. The challenges faced by the Ethereum community during the DeFi summer of 2020 when fees spiked to triple-digits, the subsequent emergence of Layer 2 technologies such as sidechains and zk-rollups, and the adoption vertical for those technologies have set a strong standard for how healthy and robust scalability solutions can be implemented. As transaction volumes and fees continue to surge, the Bitcoin network will only face more of the same challenges until a proper solution is implemented.
With a deep background in EVM (Ethereum Virtual Machine) Layer 2 technologies and zero-knowledge powered rollups, zkBTC is proud to be leveraging Polygon Labs’ unrivaled zkEVM scalability stack to bring a high-performance solution to the Bitcoin community that is as cost-effective for end-users as it is inviting to new and rising applications.
May the future of Bitcoin be as decentralized, diverse, and inclusive as its past.
zkBTC invites you to join the Bitcoin scalability mission to reunite the Bitcoin community, ensure optimal accessibility and affordability for network transactions, and satisfy all demand for Bitcoin and rising Bitcoin-native use cases.
