A New Chapter in the Bitcoin Ecosystem: Exploring Programmability and Scalability Solutions

Bitcoin, as the most liquid and secure blockchain, is attracting significant attention from developers. With the rise of inscriptions, the Programmability and scalability issues of the Bitcoin ecosystem have become hot topics. Developers are exploring various innovative solutions, such as zero-knowledge proofs, data availability, sidechains, rollups, and restaking technologies, to further advance the Bitcoin ecosystem.

However, Bitcoin faces some inherent limitations. Its scripting language sacrifices Turing completeness for security, the storage structure is mainly designed for simple transactions, and it lacks a virtual machine to run smart contracts. These factors prevent Bitcoin from directly supporting complex smart contract functionalities like other blockchains.

Nevertheless, the Bitcoin network has undergone some important upgrades in recent years. The Segregated Witness (SegWit) in 2017 expanded the block size limit, while the Taproot upgrade in 2021 optimized the signature verification process, paving the way for more complex transaction types. These advancements have provided new possibilities for the programmability of Bitcoin.

In 2022, developer Casey Rodarmor proposed the "Ordinal Theory", pioneering a new method to embed arbitrary data in Bitcoin transactions, providing more possibilities for applications such as smart contracts.

Currently, most projects that enhance Bitcoin's programmability rely on layer 2 (L2) solutions. However, this approach often requires users to trust cross-chain bridges, which has become a significant barrier to acquiring users and liquidity. Additionally, Bitcoin's lack of a native virtual machine or programmability makes trustless communication between L2 and L1 difficult.

In this context, some innovative projects are attempting to enhance the Programmability of Bitcoin based on its native attributes. RGB, RGB++, and Arch Network are such attempts, as they provide Bitcoin with the capability for smart contracts and complex transactions through different methods:

1. RGB implements smart contracts through off-chain client validation, recording state changes in Bitcoin's UTXO. Although it has certain privacy advantages, it is complex to operate, lacks programmability of contracts, and develops relatively slowly.

2. RGB++ is an improvement on RGB, providing a cross-chain solution for metadata assets by using the chain itself as a consensus client validator, and supporting the transfer of any UTXO structure chain.

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

RGB adopts an off-chain verification method, moving the verification of token transfers from the Bitcoin consensus layer to off-chain, where it is validated by specific transaction-related clients. This method, while enhancing privacy and efficiency, also makes it difficult for third parties to view transactions, leading to complicated operations and development challenges. RGB introduces the concept of single-use seals, where each UTXO can only be spent once, providing an effective state management mechanism for smart contracts.

RGB++ builds on RGB with innovations, utilizing Turing-complete UTXO chains (such as CKB) to handle off-chain data and smart contracts, while ensuring security through isomorphic binding to BTC. This approach not only enhances the programmability of Bitcoin but also extends to all Turing-complete UTXO chains, boosting cross-chain interoperability and asset liquidity. RGB++ achieves bridge-less cross-chain interactions through UTXO isomorphic binding, avoiding the "fake coin" problem of traditional cross-chain bridges, ensuring the authenticity and consistency of assets.

The Arch Network consists of the Arch zkVM and a verification node network, utilizing zero-knowledge proofs and a decentralized verification network to ensure the security and privacy of smart contracts. The Arch zkVM executes smart contracts and generates zero-knowledge proofs using RISC Zero ZKVM, which are verified by a decentralized network of verification nodes. The system operates based on the UTXO model, encapsulating the state of smart contracts in State UTXOs, while Asset UTXOs are used to represent Bitcoin or other tokens. The Arch verification network verifies the ZKVM content through randomly selected leader nodes and aggregates node signatures using the FROST signature scheme, ultimately broadcasting the transaction to the Bitcoin network.

Although these solutions each have their own characteristics, they all continue the idea of binding UTXO, using the one-time use property of UTXO to record the state of smart contracts. However, they also face some common challenges, such as poor user experience, long confirmation delays, and low performance. In particular, Arch and RGB mainly expand functionality rather than improve performance, while RGB++ improves user experience by introducing high-performance UTXO chains, but it also brings additional security assumptions.

As more developers join the Bitcoin community, we expect to see more innovative scaling solutions emerge. Currently, the op-cat upgrade proposal is actively being discussed. It is worth paying attention to those solutions that align with Bitcoin's native properties, especially the UTXO binding method, which provides the most effective way to expand Bitcoin's programmability without upgrading the Bitcoin network. If user experience issues can be resolved, this will bring a significant breakthrough for the development of Bitcoin smart contracts.