The Programmability Innovation of the Bitcoin Ecosystem

Bitcoin, as the current blockchain with the best liquidity and highest security, is undergoing a revolution in Programmability. With the explosion of inscription technology, a large number of developers are flocking to the BTC ecosystem, starting to pay attention to its programmability and scalability issues. By introducing innovative solutions such as zero-knowledge proofs, data availability, sidechains, rollups, and restaking, the BTC ecosystem is ushering in a new peak of prosperity, becoming the main focus of this bull market.

However, many scalability solutions have drawn on the experiences of smart contract platforms like Ethereum, often relying on centralized cross-chain bridges, which become potential weaknesses of the system. Few solutions are designed based on the characteristics of BTC itself, which is related to the poor developer experience of BTC. For various reasons, BTC cannot run smart contracts directly like Ethereum:

1. The BTC scripting language limits Turing completeness to ensure security, making it unable to execute complex smart contracts.
2. The BTC blockchain storage is designed for simple transactions and is not optimized for complex smart contracts.
3. BTC lacks a dedicated virtual machine for running smart contracts.

Nevertheless, in recent years, multiple upgrades to the BTC network have created conditions to enhance Programmability. The Segregated Witness in 2017 expanded the block size limit, and the Taproot upgrade in 2021 enabled batch signature verification, making complex transactions such as atomic swaps and multi-signature wallets more efficient. In 2022, the "Ordinal Theory" proposed by developer Casey Rodarmor opened up new possibilities for directly embedding state information and metadata on the BTC chain.

Currently, most projects enhancing Bitcoin's programmability rely on layer two networks (L2), which requires users to trust cross-chain bridges, becoming a major obstacle for L2 to acquire users and liquidity. In addition, Bitcoin lacks a native virtual machine or programmability, making it impossible to achieve communication between L2 and L1 without adding extra trust assumptions.

To address these issues, projects like RGB, RGB++, and Arch Network attempt to enhance its Programmability through different methods based on the native properties of BTC:

1. RGB adopts an off-chain client-validated smart contract solution, recording state changes in the UTXO of Bitcoin. Although it has certain privacy advantages, it is cumbersome to use and lacks contract composability, resulting in slow development.

2. RGB++ is another extension scheme based on the RGB concept, still based on UTXO binding, but by using the chain itself as a consensus client validator, it provides a metadata asset cross-chain solution that supports the transfer of any UTXO structured chain.

3. Arch Network provides a native smart contract solution for BTC, creating a ZK virtual machine and validator node network, and aggregates transactions to record state changes and asset records in BTC transactions.

RGB moves the token transfer verification from the consensus layer to off-chain verification, conducted by specific client applications related to the transaction. Although this method enhances privacy and efficiency, it also makes it difficult for third parties to observe, complicating operations and development. RGB introduces the concept of single-use seals, where each UTXO can only be spent once, effectively locking it at creation and unlocking it at spending, thereby providing an effective state management mechanism.

RGB++ utilizes the Turing-complete UTXO chain ( like CKB ) to process off-chain data and smart contracts, ensuring security through isomorphic binding with BTC. It extends support for all Turing-complete UTXO chains, enhancing cross-chain interoperability and asset liquidity. RGB++ achieves bridge-less cross-chain through UTXO isomorphic binding, avoiding the "fake coin" problem, and ensuring asset authenticity and consistency. Its on-chain verification simplifies the client verification process, optimizing the user experience.

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

These solutions each have their own characteristics, but they all continue the approach of binding UTXO. The one-time use property of UTXO is more suitable for recording the state of smart contracts. However, they also face issues such as poor user experience, long confirmation delays, and low performance. RGB++ improves user experience by introducing a high-performance UTXO chain, but it also brings additional security assumptions.

As more developers join the BTC community, we will see more innovative scaling solutions, such as the op-cat upgrade proposal that is currently being actively discussed. Solutions that align with the native attributes of BTC deserve special attention, and the UTXO binding method is the most effective way to expand BTC's Programmability without upgrading the BTC network. As long as user experience issues can be addressed, this will be a significant breakthrough in the development of BTC smart contracts.