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In the world of cryptocurrency, Bitcoin (BTC) has always been a focal point, but its transaction speed and cost issues have been ongoing challenges. To address these problems, various Layer 2 (L2) technologies have emerged. Today, let's discuss several mainstream BTC L2 technologies and share my insights on Taproot Consensus.
Lightning Network:
Technical Principle: The Lightning Network processes transactions off-chain by creating multi-signature payment channels. Suppose Alice and Bob want to trade frequently; they can create a multi-signature address and deposit Bitcoin into it. This address acts like a shared wallet where transactions occur. The final balance is only recorded on the Bitcoin main chain when they close the payment channel.
Advantages: Capable of handling a large number of small, fast transactions with low fees and quick processing times.
Use Cases: Ideal for everyday spending and merchant payments, as it enables high-frequency microtransactions (KuCoin) (CoinGecko).
Stacks (STX):
Technical Principle: Stacks uses the Proof of Transfer (PoX) consensus mechanism. Essentially, miners burn or lock Bitcoin on the Bitcoin chain to compete for the right to mine on the Stacks chain and receive STX tokens. Alice can use her STX tokens to deploy smart contracts or participate in decentralized applications (DApps) on the Stacks chain.
Advantages: Adds more functionality to Bitcoin, supporting complex financial applications and smart contracts.
Use Cases: Primarily used for decentralized finance (DeFi), NFTs, and applications requiring smart contract support (coin bureau) (CoolWallet).
Liquid Network:
Technical Principle: Liquid Network enhances Bitcoin transaction speed and privacy through sidechain technology. Users can lock Bitcoin on the main chain to generate an equivalent amount of Liquid Bitcoin (L-BTC), which can be quickly traded on the Liquid Network. For example, Alice can convert her Bitcoin to L-BTC, trade rapidly on Liquid, and then convert back to Bitcoin.
Advantages: Supports private transactions and asset issuance, suitable for scenarios requiring high-frequency and confidential transactions.
Use Cases: Financial institutions, exchanges, and users needing fast and private transactions (KuCoin) (coin bureau).
Rootstock (RSK):
Technical Principle: Rootstock achieves smart contracts and decentralized applications through merged mining and RSK tokens. Merged mining allows Bitcoin miners to work for both the Bitcoin and RSK chains, earning RSK tokens. Alice can use RSK tokens to run smart contracts on Rootstock, which can interact directly with Bitcoin.
Advantages: Provides a highly secure smart contract platform, suitable for complex DeFi applications.
Use Cases: Decentralized finance, smart contract platforms, etc. (coin bureau) (CoolWallet).
BEVM (Bitcoin Ethereum Virtual Machine):
Technical Principle: BEVM is based on Taproot Consensus and fully compatible with the Ethereum Virtual Machine (EVM). This means Alice can use her Bitcoin to pay gas fees and run EVM-compatible smart contracts and DApps on BEVM.
Advantages: High privacy, efficiency, and support for complex smart contracts and decentralized applications.
Use Cases: DeFi, NFTs, cross-chain applications, and scenarios requiring high privacy (GitHub) (BEVM-Blog) (Bittime).
Taproot Consensus, a core technology used by BEVM, demonstrates several significant advantages, making it stand out among Bitcoin Layer 2 technologies.
High Privacy and Security:
Schnorr Signatures: Taproot introduces Schnorr signature technology, which allows key aggregation. This means multiple participants can generate a single aggregated signature, significantly enhancing privacy and transaction efficiency. Compared to traditional signature methods, Schnorr signatures save block space and make multi-party transactions more private (BEVM-Blog) (Bittime).
MAST Technology: By using Merkelized Abstract Syntax Trees (MAST), only the executed part of the script needs to be revealed, not the entire script, enhancing privacy and saving space (BEVM-Blog).
Efficient Transaction Processing:
Batch Verification: Another advantage of Schnorr signatures is batch verification, where multiple signatures can be verified together, increasing transaction processing speed. This is especially important for Layer 2 networks handling high-frequency transactions, making transactions faster and more efficient (BEVM-Blog).
Decentralized PoS Consensus:
Overall, Taproot Consensus provides an efficient, secure, and private solution for Bitcoin Layer 2 networks by integrating advanced cryptographic technologies and decentralized consensus mechanisms. This gives it a significant competitive edge in decentralized finance, smart contracts, and cross-chain applications. In the future, this technology is expected to bring broader applications and more users to Bitcoin.
In the world of cryptocurrency, Bitcoin (BTC) has always been a focal point, but its transaction speed and cost issues have been ongoing challenges. To address these problems, various Layer 2 (L2) technologies have emerged. Today, let's discuss several mainstream BTC L2 technologies and share my insights on Taproot Consensus.
Lightning Network:
Technical Principle: The Lightning Network processes transactions off-chain by creating multi-signature payment channels. Suppose Alice and Bob want to trade frequently; they can create a multi-signature address and deposit Bitcoin into it. This address acts like a shared wallet where transactions occur. The final balance is only recorded on the Bitcoin main chain when they close the payment channel.
Advantages: Capable of handling a large number of small, fast transactions with low fees and quick processing times.
Use Cases: Ideal for everyday spending and merchant payments, as it enables high-frequency microtransactions (KuCoin) (CoinGecko).
Stacks (STX):
Technical Principle: Stacks uses the Proof of Transfer (PoX) consensus mechanism. Essentially, miners burn or lock Bitcoin on the Bitcoin chain to compete for the right to mine on the Stacks chain and receive STX tokens. Alice can use her STX tokens to deploy smart contracts or participate in decentralized applications (DApps) on the Stacks chain.
Advantages: Adds more functionality to Bitcoin, supporting complex financial applications and smart contracts.
Use Cases: Primarily used for decentralized finance (DeFi), NFTs, and applications requiring smart contract support (coin bureau) (CoolWallet).
Liquid Network:
Technical Principle: Liquid Network enhances Bitcoin transaction speed and privacy through sidechain technology. Users can lock Bitcoin on the main chain to generate an equivalent amount of Liquid Bitcoin (L-BTC), which can be quickly traded on the Liquid Network. For example, Alice can convert her Bitcoin to L-BTC, trade rapidly on Liquid, and then convert back to Bitcoin.
Advantages: Supports private transactions and asset issuance, suitable for scenarios requiring high-frequency and confidential transactions.
Use Cases: Financial institutions, exchanges, and users needing fast and private transactions (KuCoin) (coin bureau).
Rootstock (RSK):
Technical Principle: Rootstock achieves smart contracts and decentralized applications through merged mining and RSK tokens. Merged mining allows Bitcoin miners to work for both the Bitcoin and RSK chains, earning RSK tokens. Alice can use RSK tokens to run smart contracts on Rootstock, which can interact directly with Bitcoin.
Advantages: Provides a highly secure smart contract platform, suitable for complex DeFi applications.
Use Cases: Decentralized finance, smart contract platforms, etc. (coin bureau) (CoolWallet).
BEVM (Bitcoin Ethereum Virtual Machine):
Technical Principle: BEVM is based on Taproot Consensus and fully compatible with the Ethereum Virtual Machine (EVM). This means Alice can use her Bitcoin to pay gas fees and run EVM-compatible smart contracts and DApps on BEVM.
Advantages: High privacy, efficiency, and support for complex smart contracts and decentralized applications.
Use Cases: DeFi, NFTs, cross-chain applications, and scenarios requiring high privacy (GitHub) (BEVM-Blog) (Bittime).
Taproot Consensus, a core technology used by BEVM, demonstrates several significant advantages, making it stand out among Bitcoin Layer 2 technologies.
High Privacy and Security:
Schnorr Signatures: Taproot introduces Schnorr signature technology, which allows key aggregation. This means multiple participants can generate a single aggregated signature, significantly enhancing privacy and transaction efficiency. Compared to traditional signature methods, Schnorr signatures save block space and make multi-party transactions more private (BEVM-Blog) (Bittime).
MAST Technology: By using Merkelized Abstract Syntax Trees (MAST), only the executed part of the script needs to be revealed, not the entire script, enhancing privacy and saving space (BEVM-Blog).
Efficient Transaction Processing:
Batch Verification: Another advantage of Schnorr signatures is batch verification, where multiple signatures can be verified together, increasing transaction processing speed. This is especially important for Layer 2 networks handling high-frequency transactions, making transactions faster and more efficient (BEVM-Blog).
Decentralized PoS Consensus:
Overall, Taproot Consensus provides an efficient, secure, and private solution for Bitcoin Layer 2 networks by integrating advanced cryptographic technologies and decentralized consensus mechanisms. This gives it a significant competitive edge in decentralized finance, smart contracts, and cross-chain applications. In the future, this technology is expected to bring broader applications and more users to Bitcoin.
Bitcoin SPV Light Nodes: Taproot Consensus combines Bitcoin SPV light nodes and BFT PoS networks to achieve a highly decentralized consensus mechanism. These light nodes only need block headers and transactions interacting with Layer 2 to verify, ensuring network security and stability (BEVM-Blog) (Bittime).
Cross-Chain Compatibility:
EVM Compatibility: BEVM leverages Taproot Consensus to achieve compatibility with the Ethereum ecosystem, allowing Bitcoin to seamlessly integrate into various DeFi protocols and applications. This expands Bitcoin's use cases and increases its flexibility and utility in cross-chain transactions (GitHub) (BEVM-Blog).
Bitcoin SPV Light Nodes: Taproot Consensus combines Bitcoin SPV light nodes and BFT PoS networks to achieve a highly decentralized consensus mechanism. These light nodes only need block headers and transactions interacting with Layer 2 to verify, ensuring network security and stability (BEVM-Blog) (Bittime).
Cross-Chain Compatibility:
EVM Compatibility: BEVM leverages Taproot Consensus to achieve compatibility with the Ethereum ecosystem, allowing Bitcoin to seamlessly integrate into various DeFi protocols and applications. This expands Bitcoin's use cases and increases its flexibility and utility in cross-chain transactions (GitHub) (BEVM-Blog).
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