The Evolution Of Bitcoin

12/18/2023

Botanix Labs

Botanix Labs

From its humble origins in 2008, the Bitcoin blockchain has come a long way in its 15-year history.

This article will explore the evolution and journey of Bitcoin to date and what the future holds for the most secure and decentralized blockchain in the world.

The Beginnings

Bitcoin was launched initially as a peer-to-peer network. Its underlying purpose was fairly simple: To create a form of electronic cash that can be transferred over the internet without the need of trusted third parties such as banks, central banks, brokers, corporations or governments.

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Bitcoin was made possible through a Proof-of-Work (PoW) blockchain where “miners” run computers with the computational power to validate transactions, form blocks, and add those blocks to a chain.

This Bitcoin blockchain then serves as a distributed ledger, keeping a record of all transactions that have ever taken place along with the state of the blockchain, and finally broadcasted to all nodes on the network.

In its initial phases, the Bitcoin blockchain was used for exactly what it was set out for. People would use it as a trustless and censorship-resistant way to transfer value from one person to another over the internet.

Eventually, Bitcoin started picking up momentum. As word spread, so did public perception around the potential of Bitcoin and the use cases for blockchains and cryptocurrencies. While some people continued to treat the network as a way to simply transfer value, some considered bitcoin (BTC) both a store of value and a new asset class, similar to gold.

While the merits of these arguments are beyond the scope of this article, the important takeaway is that Bitcoin has continuously attracted more attention, legitimacy and respect since inception.

Naturally, with a surge in interest came a yearning for innovation. New market participants proposed new ideas exploring the different applications and design approaches for blockchains inspired by Bitcoin.

The biggest innovation came with the launch of Ethereum in 2015. Ethereum introduced smart contracts and programmability to blockchains and it changed everything. This would lead to the vast majority of innovation in the blockchain space shifting to Ethereum as developers deployed a variety of decentralized applications (dapps) ranging from financial primitives, to games and non-fungible tokens (NFTs).

Meanwhile, Bitcoin remained somewhat stagnant. That was until recently.

The Bitcoin network is evolving and on the cusp of potentially becoming something much bigger.

Lightning Network

Arguably the biggest leap in Bitcoin's evolutionary journey was the creation of the Lightning Network.

The idea for Lightning was initially proposed by Joseph Poon & Thaddeus Dryja in 2016 and was designed for a specific use case, solving the scalability limits of Bitcoin, mostly with respect to Bitcoin as a payments rail.

Although Bitcoin has worked as intended, a surge in the number of people using the network led to serious issues with translation throughput. Slow transaction times and high gas fees made it unusable for many people. This meant using Bitcoin as a form of electronic cash became increasingly unfeasible.

Enter the Lightning network!

This layer 2 solution built on top of Bitcoin, provided a useful approach to off-chain transactions. The Lightning Network channel is a transaction mechanism between two parties, making it a payments-focused solution for Bitcoin.

Since inception, the Lightning Network has been consistently growing. At the time of writing, the cumulative capacity across all Lightning Network channels was 5.3M BTC which equates to roughly $195M in value.

This was a big first step in extending the utility of Bitcoin beyond its initial limits.

Though the Lighting Network made progress in solving issues related to payments on Bitcoin, other issues remained, specifically that of programmability and smart contracts.

Unlike Ethereum, the Bitcoin blockchain historically did not support smart contracts which allow for the deployment of decentralized applications onchain.

Stacks Network

stacks-light-themeEnter Stacks (initially called Blockstack) to combat this exact problem.

The Stacks Network launched in early 2021 and introduced smart contracts to the Bitcoin Blockchain. The general premise was to bring native smart contracts to Bitcoin and allow for the creation of popular Ethereum applications such as DeFi and NFTs.

Ever since then, Stacks has consistently been growing and attracting new users and developers to build on Bitcoin.

However, things didn't stop there.

In 2022, Bitcoin began to support a new use case - NFTs.

Bitcoin Ordinals

taproot-wizardsNFTs have been extremely popular on Ethereum, reaching a peak in collective value and public interest in 2021. On Bitcoin, however, NFTs weren’t feasible which is why we never saw that kind of an NFT Mania on the network.

That changed in 2021 with the Taproot Upgrade.

Taproot was an upgrade to Blockchain that replaced its older signature model with Schnorr signatures. This gave Bitcoin faster signatures that enhanced privacy, while allowing for the implementation of lightweight smart contracts and something known as inscriptions.

After Taproot, anyone could now inscribe things on satoshis (sats), the smallest divisible unit of Bitcoin. What the Bitcoin Ordinals team figured out is that they can use this inscription mechanism to create a Bitcoin-native NFT.

Upon launch, Ordinals took the industry by storm.

Till date, Ordinals has led to 42.4M total inscriptions generating over $105M in fees and continues to grow.

Despite many interesting innovations taking place on Bitcoin now, there is still so much more room growth and innovation that can occur.

Botanix: The Evolution of Bitcoin

Botanix Horizontal DarkBitcoin is evolving as recent innovations coming to the blockchain have been focused on programmability.

While taking steps to add programmability to Bitcoin is a good thing, one blockchain has already achieved product-market fit and programmability at scale – Ethereum.

At the heart of Ethereum is the Ethereum Virtual Machine (EVM), a virtual machine that runs all the code and smart contracts on its blockchain. It’s this execution environment that enables decentralized applications on Ethereum.

While Stacks brought smart contracts to Bitcoin, they did so by creating their own proprietary coding language called Clarity which presents some friction and a learning curve to developers.

The beauty of the EVM is that it’s been in use long enough to capture the majority of web3 developer mindshare.

History shows that capturing and retaining developer mindshare will attract the most applications, which attracts the most users and liquidity. This is why most non-EVM chains have struggled to compete with Ethereum in this regard. The EVM boasts a familiar developer experience that has become a standard.

So, rather than creating a new language and execution environment on Bitcoin, why not just build an EVM-compatible layer 2 on top of Bitcoin?

That’s Botanix.

Botanix Labs has built an EVM-compatible layer 2 on Bitcoin, providing a familiar environment for web3 developers to easily deploy their Ethereum dapps on Bitcoin. Through Botanix, Solidity smart contracts from Ethereum can be deployed (plug-and-play) on Bitcoin with no code changes.

New developers, already familiar with the EVM experience, can create their own applications on Botanix with ease.

By supporting the existing EVM developer base, Botanix aims to significantly increase the usage of Bitcoin through a wide range of decentralized applications.

Sounds great, right? Yes, It’s amazing, but there remain skeptics who are not convinced developers will want to deploy their dapps on Ethereum? Why would developers want to deploy their Ethereum dapps on Bitcoin?

The answer is simple.

Bitcoin has a stronger profile when it comes to security and decentralization. BTC is considered the reserve currency of the crypto space and a good candidate for the future reserve currency of global financial markets.

The only thing Bitcoin lacks is programmability and scalability which supports application development. This is why Botanix was created.

Amidst a rapidly changing industry, the evolution of Bitcoin has gone somewhat unnoticed until now. Botanix proposes the next logical step in the evolutionary journey of Bitcoin and its march towards becoming the foundation of our digital and global monetary systems.

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