The expansion plan based on the Bitcoin UTXO account model is considered by the industry to be the "most halal" second-layer solution. This plan attempts to perform off-chain ledger calculations based on Bitcoin UTXO and ensure the authenticity of the ledger through client verification, thereby retaining the original characteristics of Bitcoin and achieving second-layer ledger sharing and security.
The industry has long recognized that this solution is very difficult to implement. Well-known projects and protocols built through this solution include RGB, RGB++, BitVM, etc. Although well-known, the progress of the solution is actually relatively slow. For example, many technical points involved in RGB are difficult to implement. For example, although BitVM provides a method to implement complex contracts on the Bitcoin network, there are still disputes over some technical details.
Why are there still many project parties willing to implement such a relatively difficult technical route? Compared with other models, the second-layer solution of the UTXO model isomorphic to BTC, which is undoubtedly both safe and elegant. Looking back at the development history of the second-layer expansion solution based on UTXO, we find that the popularity of the "asset issuance" model written into UTXO, such as inscriptions, has injected a lot of attention and resources into the second-layer expansion solution of this UTXO model, allowing developers and project parties to seriously examine the possibility of realizing the second-layer solution through this path.
Unlike Ethereum's second-layer expansion plan, which has a clear plan, Bitcoin's second-layer plans are flourishing. Coupled with some upgrades to the Bitcoin protocol itself, Bitcoin's second layer actually has many possibilities, which is fun and innovative.
What improvements and innovations have the project owners made to Bitcoin's second layer based on UTXO technology? In order to find the answers to these questions, Golden Finance interviewed TBC's CMO to explore the implementation path of Bitcoin's second layer based on technology in the UTXO model.
Golden Finance: Could you please tell us how the second layer of Bitcoin based on the UTXO model is technically implemented?
TBC: This technology encapsulates data into each UTXO of Bitcoin, and then ensures asset security through client verification.
For example, the idea of RGB is to bind the off-chain RGB transaction with the UTXO of the Bitcoin transaction. The RGB++ protocol is inspired by the RGB protocol, and its main idea is similar to that of RGB, which performs off-chain calculations, executes and verifies transactions, and finally settles on the Bitcoin chain. The difference between RGB and RGB++ is that RGB++ adopts a different approach in the transaction and asset verification process.
TBC is different from the above two solutions. We adopt a solution of large blocks plus data trimming and smart contracts. We are positioned as a smart contract layer for Bitcoin, introducing smart contract solutions to the Bitcoin system and bringing massive applications. TBC is also the creator of the Bitcoin virtual machine BVM.
At present, the Bitcoin ecosystem is rising, more and more developers are pouring in, and new applications are emerging one after another. However, the Bitcoin main network block is still limited to one megabyte, and as the necessary data packets transmitted on the network every ten minutes are getting larger and larger, the main network can no longer meet this demand. The design of Bitcoin's small blocks cannot handle more than 100 megabytes per minute.
The TBC model of large blocks, data trimming and UTXO smart contracts can help BTC solve congestion and block limit problems. TBC initially chose this path because it discovered that the UTXO module is such an underlying model that is naturally suitable for high concurrency and high performance.
Golden Finance: What difficulties did TBC encounter during the implementation of this path and how was it resolved?
TBC: The main problem is that BTC has poor scalability. It was not until 2017 that the Segregated Witness upgrade was activated, which solved some transaction plasticity issues on the Bitcoin chain. In 2018, developers began to gradually deploy some nodes. More importantly, the parameter upgrade in 2012 brought a more efficient, flexible and private transmission method to Bitcoin. The core of this upgrade is the use of Schnorr signatures and module abstract syntax tree contracts.
The above upgrades have provided a good foundation for the further expansion of BTC. Some of the development difficulties we mentioned earlier have been alleviated to a certain extent after the upgrade. Because the development of Bitcoin's own technology, similar to modifying the signature, actually adds a bridge connecting the first layer and the second layer, not directly expanding the first layer.
Golden Finance: There are currently many routes and projects for the second layer of Bitcoin. What do you think?
TBC: In my opinion, it is feasible to use BTC as the asset settlement layer and then build local consensus and computing verification capabilities to achieve the second-layer expansion solution. A big difference between the Bitcoin ecosystem and the Ethereum ecosystem is that it does not abide by any unified norms and orthodoxy, so it can flourish.
Golden Finance: The consensus in the industry is that the UTXO layer 2 model is too difficult to implement? How to solve this difficulty?
TBC: There is a misunderstanding about the UTXO model in the industry. They believe that the UTXO model cannot maintain the full state or implement circular calls, so it cannot implement smart contracts. This view is now one-sided and outdated. TBC has proved that the blockchain of the UTXO model can fully implement smart contracts, but the implementation method is different from other second-layer solutions. Of course, the basic tools for implementing smart contracts based on the UTXO model are maturing, and everyone is constantly trying.
For TBC, the key node of development is actually the upcoming launch of the TBC 20 standard protocol, which means that it will become easier for project parties to develop applications and protocols on TBC, which can promote the prosperity of the TBC chain ecosystem and even the prosperity of the entire Bitcoin ecosystem.
Golden Finance: What are the advantages and innovations of TBC compared with other second-layer solutions?
TBC: We are an innovative route. Currently, only TBC is working on this BVM solution. Simply put, this solution is a virtual machine based on the recovery and function expansion of Bitcoin's script system, and is also an execution engine for TBC smart contracts.
It includes language stacks such as input and output stacks, so that higher-level logic can be implemented when performing any operation. The current execution structure of programming languages relies heavily on the execution stack. In principle, as long as the stack structure is used, any complex program can be implemented. Of course, sufficient memory resources must be ensured at the same time. The stack structure can also be used as a basis for programming languages, but due to some restrictions of Bitcoin on the script system, only some simple logical judgments can be performed, and the opcodes that can be used are relatively limited, so some complex smart contracts cannot be implemented.
This requires BTC’s core developers to continuously make proposals, such as the recently popular OP_CAT proposal. Simply put, OP_CAT can realize the combined connection processing of multiple UTXO unlocking script byte strings to enhance the programmable features of the BTC mainnet.
Golden Finance: What stage has the Bitcoin ecosystem reached at present, and what are the difficulties in its current development?
TBC: The Bitcoin ecosystem is definitely still in its early stages. The current difficulty is that there are too few developers. Some developers who have just joined the Bitcoin ecosystem need to relearn the development language, which takes about one or two months. As the number of developers increases, the number of applications developed will increase, thus achieving a qualitative change from quantitative change, and achieving a prosperity similar to that of the Ethereum ecosystem. Currently, there are more teams in the Asia-Pacific region developing the Bitcoin ecosystem.
Golden Finance: For retail investors, how to seize some opportunities created by Bitcoin?
TBC: Protocols that can help Bitcoin make small payments or large mortgage lending protocols are worth paying attention to. The smart contract layer based on the UTXO architecture can also produce some excellent projects.
