Proof of Stake vs Proof of Work
The debate of which consensus is better proof of work or proof of stake is an ongoing debate. Even though there are advantages and disadvantages of both the consensus. Let me explain that each consensus has its own primary and secondary objectives. The Bitcoin network utilises PoW consensus which is used for pure monetary value and preservation of buying power as a primary objective by burning a physical resource. Have you ever come across any Defi exchanges using Bitcoin network in its exist...
Scope of Non-Fungible Tokens
Non-fungible tokens represents a unique non-fungible digital asset that is stored in a blockchain. It tracks the proof of ownership of the digital asset from its very existence and its authenticity is verifiable on the blockchain. NFTs can be created for anything that can be encoded into a digital format. NFTs can either be minted as ERC 721 or ERC 1155. ERC 1155 standard was developed by the gaming company Enjin and was released in June 2018. It was specifically designed for GameFi, a web3 b...
Intrinsic Value of G☉ld & ₿itc☉in
G☉ld & ₿itc☉inWe can’t compare apples to oranges, we have to establish a common parameter to compare. The 1st parameter is the energy that is required to grow, distribute 1 fruit from farm to table. The 2nd parameter is the shelf life or the decay time & the time to grow each fruit. Thus we can establish 2 common parameters that is energy & time.Amount of Energy SpentNow let’s equate energy required to create & mine 10 gms of g☉ld to 1 ₿itc☉in, as I have equated 10 gms to 1 ₿itc☉in approx bas...
Proof of Stake vs Proof of Work
The debate of which consensus is better proof of work or proof of stake is an ongoing debate. Even though there are advantages and disadvantages of both the consensus. Let me explain that each consensus has its own primary and secondary objectives. The Bitcoin network utilises PoW consensus which is used for pure monetary value and preservation of buying power as a primary objective by burning a physical resource. Have you ever come across any Defi exchanges using Bitcoin network in its exist...
Scope of Non-Fungible Tokens
Non-fungible tokens represents a unique non-fungible digital asset that is stored in a blockchain. It tracks the proof of ownership of the digital asset from its very existence and its authenticity is verifiable on the blockchain. NFTs can be created for anything that can be encoded into a digital format. NFTs can either be minted as ERC 721 or ERC 1155. ERC 1155 standard was developed by the gaming company Enjin and was released in June 2018. It was specifically designed for GameFi, a web3 b...
Intrinsic Value of G☉ld & ₿itc☉in
G☉ld & ₿itc☉inWe can’t compare apples to oranges, we have to establish a common parameter to compare. The 1st parameter is the energy that is required to grow, distribute 1 fruit from farm to table. The 2nd parameter is the shelf life or the decay time & the time to grow each fruit. Thus we can establish 2 common parameters that is energy & time.Amount of Energy SpentNow let’s equate energy required to create & mine 10 gms of g☉ld to 1 ₿itc☉in, as I have equated 10 gms to 1 ₿itc☉in approx bas...
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Ethereum smart contracts have become more resilient over the years because of many hard forks, radical non-conservative management and POS migration. If we implement covenants in ₿itcoin it will be wise to learn from Ethereum mistakes and to prevent ₿itcoin network getting stuck in similar loops and traps.
Let me discuss a concrete example, taproot was activated in 2021 with the objective of progressively upgrading to covenants. We all know the unintended consequences of ordinals and BRC20 on the ₿itcoin. ₿itcoin was not designed for smart contracts unlike Ethereum. Ethereum was designed for smart contract, they decoupled nfts and storage by design to avoid on chain data bloats.
During the last 7 years of Ethereum how many unintentional design bugs, smart contract bugs and intentional bugs that we have come across . Every smart contract hack in Ethereum is a bug.
It is estimated that the total amount of value stolen or lost due to security bugs in smart contracts is over $1 billion. Some of the high-profile hacking, such as the DAO hack (3.6M ETH stolen, worth over $1B in today’s prices), Parity multi-sig wallet hack ($30M lost to hackers), and the Parity frozen wallet issue (over $300M in ETH locked forever).
If we retrofit NFTs in the ₿itcoin blockchain without decoupling storage and without enabling proper guard rails in ₿itcoin, it will destroy de-centralization and destabilize ₿itcoin network in the long run.
1.Transaction rate Constraints
The average tx per hour for ₿itcoin = 18000
The average tx per hour for Ethereum = 49000
The avg tx cost for covenants will be 3x more expensive.
2.Space Constraints
The average block size for ₿itcoin = 1000Kb / 10 mins
The average block size for Ethereum = 5,000Kb / 10 mins
The avg tx cost for Covenants will be 5x more expensive.
3.Decoupling of Smart Contract & Monetary Transaction
Monetary tx cost = 21,000 gas
Contract tx cost = 200,000 - 500,000 gas
The contract tx are 100x more expensive in Ethereum without data.
How expensive are NFT tx cost in ₿itcoin?
4.Portability of Smart Contracts to L2 Layers
Ethereum started smart contract on main chain but because of transaction cost and on chain bloating it is migrating to L2 like optimism, zk rollups and zk EVMs. Ethereum main chain and L2 chains are POS based but that’s not the case for ₿itcoin most of the L2 chains are POS like Stack.
How compatible will be ₿itcoin Network in terms of portability of smart contracts like L2 rollups?
5.Transaction Cost Spikes
How to prevent transaction spikes that are very frequent in Ethereum chain.
Similar transaction spikes are occurring in ₿itcoin chain after the launch of Runes. It is going to recur quite often what is the defense mechanism in place to deter recurrence?
6.Decoupling NFTs & Storage
How to decouple and migrate NFTS and Fungabile tokens to L2 storage. If we implement covenants without L2 storage in place we will bloat ₿itcoin blockchain.
7.OP_Codes Variable Cost
Ethereum has built in variable cost of OP_codes like SLOAD, SSTORE that deals with on chain storage and for exponential operations.
How feasible will be the variable cost for recursive covenants and on chain storage in ₿itcoin Network?
8.₿itcoin vs Bitcoin Token
₿itcoin is property backed by energy where as fungible tokens are just IOU Notes promising higher returns as a means of crowd funding and an instrument facilitating interest free loans. Also tokens can be programmed as various derivatives, it has no utility value per se.
More than 90% of the tokens are nothing but speculative nonsense, rug-pulls and derivative casinos. Only very few projects like Uniswap, ENS, Gitcoin have evolved utility over time. On the other hand Non-Fungible tokens are just digital collectibles backed by digital degens.
9.Process to deal with emergency bugs vs emergent bugs in the network
There is a precedent in ₿itcoin network regarding emergency bug forks but not a precedent or process for emergent bugs.
10 years back the ₿itcoin community was relatively small consensus was straightforward. That’s not the case anymore ₿itcoin has become a trillion dollar industry and lot of entities with vested interest have got a finger on the pie.
Now it is impossible to come to consensus weather it is emergent bug or a feature. Ordinals is a classical example of this scenario. In Covenants there will be emergent bugs and emergency bugs, how are we going to come to consensus? There is either no precedent or a viable process to reach consensus. The various actors in the ₿itcoin ecosystem does’’t share the similar values and ethics of the early community.
Summary
There is no proper rail guards or defense in depth in place for handling bugs caused by covenants in ₿itcoin network. The network for the last 10 years has been acid tested only for monetary transaction as peer to peer electronic cash.
₿itcoin network is not designed or tested for smart contracts. It is wise to migrate the covenants to L2 layers like lightning network. This is the best way that everyone involved in Bitcoin can express their gratitude to Satoshi Nakamoto for his gift to humanity in the dawn of digital era.
+K!
Ethereum smart contracts have become more resilient over the years because of many hard forks, radical non-conservative management and POS migration. If we implement covenants in ₿itcoin it will be wise to learn from Ethereum mistakes and to prevent ₿itcoin network getting stuck in similar loops and traps.
Let me discuss a concrete example, taproot was activated in 2021 with the objective of progressively upgrading to covenants. We all know the unintended consequences of ordinals and BRC20 on the ₿itcoin. ₿itcoin was not designed for smart contracts unlike Ethereum. Ethereum was designed for smart contract, they decoupled nfts and storage by design to avoid on chain data bloats.
During the last 7 years of Ethereum how many unintentional design bugs, smart contract bugs and intentional bugs that we have come across . Every smart contract hack in Ethereum is a bug.
It is estimated that the total amount of value stolen or lost due to security bugs in smart contracts is over $1 billion. Some of the high-profile hacking, such as the DAO hack (3.6M ETH stolen, worth over $1B in today’s prices), Parity multi-sig wallet hack ($30M lost to hackers), and the Parity frozen wallet issue (over $300M in ETH locked forever).
If we retrofit NFTs in the ₿itcoin blockchain without decoupling storage and without enabling proper guard rails in ₿itcoin, it will destroy de-centralization and destabilize ₿itcoin network in the long run.
1.Transaction rate Constraints
The average tx per hour for ₿itcoin = 18000
The average tx per hour for Ethereum = 49000
The avg tx cost for covenants will be 3x more expensive.
2.Space Constraints
The average block size for ₿itcoin = 1000Kb / 10 mins
The average block size for Ethereum = 5,000Kb / 10 mins
The avg tx cost for Covenants will be 5x more expensive.
3.Decoupling of Smart Contract & Monetary Transaction
Monetary tx cost = 21,000 gas
Contract tx cost = 200,000 - 500,000 gas
The contract tx are 100x more expensive in Ethereum without data.
How expensive are NFT tx cost in ₿itcoin?
4.Portability of Smart Contracts to L2 Layers
Ethereum started smart contract on main chain but because of transaction cost and on chain bloating it is migrating to L2 like optimism, zk rollups and zk EVMs. Ethereum main chain and L2 chains are POS based but that’s not the case for ₿itcoin most of the L2 chains are POS like Stack.
How compatible will be ₿itcoin Network in terms of portability of smart contracts like L2 rollups?
5.Transaction Cost Spikes
How to prevent transaction spikes that are very frequent in Ethereum chain.
Similar transaction spikes are occurring in ₿itcoin chain after the launch of Runes. It is going to recur quite often what is the defense mechanism in place to deter recurrence?
6.Decoupling NFTs & Storage
How to decouple and migrate NFTS and Fungabile tokens to L2 storage. If we implement covenants without L2 storage in place we will bloat ₿itcoin blockchain.
7.OP_Codes Variable Cost
Ethereum has built in variable cost of OP_codes like SLOAD, SSTORE that deals with on chain storage and for exponential operations.
How feasible will be the variable cost for recursive covenants and on chain storage in ₿itcoin Network?
8.₿itcoin vs Bitcoin Token
₿itcoin is property backed by energy where as fungible tokens are just IOU Notes promising higher returns as a means of crowd funding and an instrument facilitating interest free loans. Also tokens can be programmed as various derivatives, it has no utility value per se.
More than 90% of the tokens are nothing but speculative nonsense, rug-pulls and derivative casinos. Only very few projects like Uniswap, ENS, Gitcoin have evolved utility over time. On the other hand Non-Fungible tokens are just digital collectibles backed by digital degens.
9.Process to deal with emergency bugs vs emergent bugs in the network
There is a precedent in ₿itcoin network regarding emergency bug forks but not a precedent or process for emergent bugs.
10 years back the ₿itcoin community was relatively small consensus was straightforward. That’s not the case anymore ₿itcoin has become a trillion dollar industry and lot of entities with vested interest have got a finger on the pie.
Now it is impossible to come to consensus weather it is emergent bug or a feature. Ordinals is a classical example of this scenario. In Covenants there will be emergent bugs and emergency bugs, how are we going to come to consensus? There is either no precedent or a viable process to reach consensus. The various actors in the ₿itcoin ecosystem does’’t share the similar values and ethics of the early community.
Summary
There is no proper rail guards or defense in depth in place for handling bugs caused by covenants in ₿itcoin network. The network for the last 10 years has been acid tested only for monetary transaction as peer to peer electronic cash.
₿itcoin network is not designed or tested for smart contracts. It is wise to migrate the covenants to L2 layers like lightning network. This is the best way that everyone involved in Bitcoin can express their gratitude to Satoshi Nakamoto for his gift to humanity in the dawn of digital era.
+K!
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