Bitcoin faces challenges in scalability, including block size limits, long transaction confirmation times, and difficulty developing smart contracts, which lead to network congestion and high fees. Fractal Bitcoin aims to seamlessly improve Bitcoin performance and address these issues without modifying the core protocol.

Fractal Bitcoin is a Bitcoin extension kit solution that aims to gradually expand the Bitcoin blockchain into a scalable computing system while maintaining consistency with the Bitcoin main chain.

As a pioneer of blockchain, Bitcoin has shortcomings in "scalability", such as limited block storage space, which hinders its potential to become a global payment network and smart contract platform.

Specifically, the main issues include:

· 1MB block size limit: This limit leads to limited transaction capacity, affecting network processing power. · Confirmation time of generating one block every 10 minutes: This longer time delays the confirmation speed of transactions. · Complex and restricted Bitcoin scripting language: This makes it difficult for other smart contracts and decentralized applications (dApps) to be developed on Bitcoin. These issues lead to network congestion and high transaction fees, limiting Bitcoin's scalability. According to the mempool and Bitcoin median transaction value chart, high on-chain transaction fees in the Bitcoin ecosystem may hinder the joining of new users. For example, in April 2024, on-chain fees soared to about $300.

In order to solve these problems, the industry has been exploring ways to improve the performance of the Bitcoin network, and Fractal Bitcoin was born under this background. Advantages of Fractal Bitcoin Based on the above-mentioned industry pain points, Fractal Bitcoin is committed to creating an extension suite solution that can be seamlessly integrated into the Bitcoin ecosystem, without requiring major modifications to the Bitcoin core protocol, while significantly improving network performance.

In general, the idea of ​​Fractal Bitcoin is to recursively build infinite expansion layers on the Bitcoin main chain to improve transaction processing capabilities and speed while maintaining full compatibility with the existing Bitcoin ecosystem. The core idea is to use Bitcoin's own core code to create a tree-like expansion structure, each layer of which can be further expanded, thereby greatly improving the parallel processing capabilities of the entire network. First, Fractal Bitcoin uses a technology called "virtualized core" to encapsulate the core of Bitcoin in a "super chip" called BCSP (Bitcoin Core Software Package).

Unlike traditional sharding technology, BCSP does not rely on central control to coordinate the work of each part. Running through a decentralized network, the BCSP system is much more efficient in processing computing tasks than executing a single node or instance alone. In this way, Fractal Bitcoin virtualizes the blockchain, making the main chain more stable without having to replace the consensus mechanism. Next, Fractal Bitcoin focuses on consensus consistency.

Consensus consistency means that Bitcoin's durable consensus is maintained by developers, miners, and users, which forms the basis of its stability. Fractal Bitcoin enhances this consensus by reusing existing code, avoiding the divergences that usually lead to forks. At the same time, as the number of virtualized instances increases, the consensus becomes more robust, in sync with the Bitcoin network's growth from a single node to thousands of nodes.

Fractal Bitcoin then uses a self-replicating approach to achieve infinite scalability through recursive instantiation of BCSP. This not only ensures the coexistence, communication, and coordination of multiple instances, but also maintains structural balance and engineering simplicity, and can scale horizontally and vertically. Existing infrastructure (such as wallets) can easily support these new instances, similar to the Ethereum infrastructure that supports networks such as Polygon and BSC.

In terms of response speed, BCSP can shorten the block confirmation time to 30 seconds. Such a fast confirmation mechanism not only increases storage space, but also reduces the complexity of system development, thereby reducing transaction costs and improving the writing efficiency of Ordinals, increasing transaction processing capacity to 20 times that of the Bitcoin main chain.

How to bridge across chains? Fractal Bitcoin uses a method similar to "cross-layer elevators" to support direct and consistent asset transfers between layers through the Elevator interface. This mechanism uses technologies such as discrete log contracts to achieve seamless transfers without the need for additional relays. This method also supports multiple asset transfer requirements between Bitcoin and other blockchains, ensuring the efficiency and security of cross-chain operations.

Mining Mechanism Fractal Bitcoin uses the same Proof of Work (PoW) consensus mechanism as Bitcoin, allowing existing BTC miners to seamlessly convert their ASICs, GPUs, and other hardware devices to mine Fractal blocks. Fractal Bitcoin introduces an original merged mining mechanism - Cadence Mining. This mechanism combines permissionless mining and merged mining. Every 3 blocks is a cycle, of which 2 blocks are generated through permissionless mining and 1 block is generated through merged mining.

This model not only retains the flexibility of miners, but also takes advantage of the strong security of the Bitcoin main chain. In addition, the Fractal Bitcoin team claims that all transactions can ultimately be traced back to the Bitcoin main chain, which guarantees the security and verifiability of the system. Currently, Fractal Bitcoin is still in the testnet stage and was officially launched on the mainnet on September 9. The team also announced the token economics, with a total supply of 105 million tokens.

As shown in the figure, Fractal Bitcoin's token economics design focuses on closely integrating with Bitcoin's security model. The team allocates half of the total token supply to Proof of Work (PoW) mining to ensure that Fractal Bitcoin is closely tied to the Bitcoin network in terms of security. The specifics of the token distribution are as follows: - 50% of the tokens are allocated to PoW mining to maintain and enhance network security. - 15% of the tokens are reserved for the ecosystem treasury to invest in and develop the Fractal ecosystem. - 5% of the tokens are used for pre-sale, targeting early investors and network participants, and these tokens will be linearly released after seven months of lock-up until the twelfth month. - 5% of the tokens are allocated to advisors for strategic advice and support. - 10% of the tokens are used for community grants to establish partnerships and liquidity programs. - 15% of the tokens are allocated to core contributors, who are responsible for the development and maintenance of Fractal's core software. In addition, Fractal Bitcoin's ecosystem is developing rapidly, including the following key components: - UniSat wallet: supports fast switching between Bitcoin mainnet and Fractal assets. - UniSatExplorer: used to query the status of the Bitcoin mainnet and the Fractal network. - UniSat API: provides a unified API interface to facilitate integration for developers and users. - Fractal Testnet: Currently open for testing, allowing users to experiment and provide feedback. The team hopes to provide users with digital identities through Fractal DID (decentralized identity), connect to UniWorlds, and establish a personal digital space. This system will support asset issuance, DeFi transactions, SocialFi releases, and the transition from Web2 to Web3. All activities will leverage the security of the Bitcoin network and be executed at a lower cost through the Fractal network.

In addition, UniSat, the development team behind Fractal Bitcoin, is also worth paying attention to. Lorenzo, the founder and CEO of UniSat, has been actively involved in the crypto field since 2018, especially in Bitcoin-related development and research. The team is composed of developers who are proficient in Bitcoin technology, covering core technologies such as SegWit, Lightning Network and TapRoot. They have achieved good results in the brc20 trading market, and the token $PIZZA they issued has also performed well, and has received special attention from Binance and OKX.

In general, the ideal solution for Bitcoin expansion should be to upgrade to Layer 1, which is the most challenging path. As the founder of UniSat said: "If other L2 and side chains are building another highway, then Fractal is building countless highways parallel to the Bitcoin mainnet." Fractal Bitcoin's product ideas and logic - "perfect compatibility with BTC, enhanced block storage space, improved network transaction processing capabilities, and improved scalability" - are theoretically feasible.

However, as the founder mentioned, Fractal Bitcoin still faces certain challenges, including the risk of 51% attacks and potential problems with bridging technology. Future performance will depend on the launch of its testnet, so let’s wait and see.