The road to digital gold’s emergence: decoding the paradigm revolution of Bitcoin ecology

Preface

When Satoshi Nakamoto buried the Genesis Block in the ruins of the 2008 financial crisis, the mysterious geek probably never imagined that Bitcoin would evolve into a digital civilization with a market value of one trillion dollars more than a decade later. As the first decentralized trust-based value storage system in human history, it reconstructs the philosophy of currency in the form of "digital gold".

However, the original architecture design gradually hindered the further development of Bitcoin. The transaction processing capacity of about 7 transactions per second and the limited script functions could no longer support the application needs of hundreds of millions of users. Even more dramatic was the mysterious disappearance of Satoshi Nakamoto in 2011, which made the community give up the idea of relying on the founder's innovation of the project, and developers around the world actively flocked to the innovation frenzy of the Bitcoin ecosystem.

This technological revolution, triggered by the original defects of Bitcoin, is shaping an ecological universe that far exceeds the Bitcoin white paper. From the expansion battle of the Bitcoin mainnet to the off-chain payment highway built by the Lightning Network; from the on-chain inscription narrative pioneered by the Ordinals protocol to the smart contract genes endowed by Stacks and Rootstock; from the value exchange achieved by cross-chain bridging technology to the decentralized financial revolution with the rise of the BTCFi ecosystem, blockchain engineers are opening up a second life for Bitcoin at a dizzying speed. They not only adhere to the core value of Bitcoin's "trust without trust", but also break through the performance shackles of the physical world through innovations such as the Lightning Network and Rollup; they not only retain the simplicity and elegance of the UTXO model, but also unlock more complex smart contract logic; they not only maintain Bitcoin's monetary sovereignty, but also use cross-chain technology to extend its value network to heterogeneous chain domains such as Ethereum and Solana.

The depth and breadth of this paradigm revolution are reshaping people's cognitive boundaries of Bitcoin. When the Ordinals protocol makes every Satoshi a carrier of digital memory, when the BRC-20 token standard replicates the madness of DeFi Summer on the Bitcoin network, and when the BitVM technology achieves the perfect coordination of off-chain computing and on-chain verification, Bitcoin is no longer the "digital gold" that can only perform simple accounting, but has evolved into a super protocol that supports complex financial contracts, carries NFT culture, and connects the multi-chain universe. There is no end in sight for this revolution yet - on the premise of protecting the decentralization and security of Bitcoin, through technological innovation, its value will benefit a wider range of people. We can expect that this cypherpunk experiment born in a garage may eventually become the underlying operating system that supports digital civilization.

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The Bitcoin ecosystem has developed rapidly in recent years and has formed many tracks with significant influence. Standing at the time node of March 2025, the main development of the Bitcoin ecosystem can be roughly summarized into the following three directions:

ØNetwork expansion

ØSmart Contract

ØCross -chain bridging

In these key areas of reshaping the Bitcoin ecosystem, a large number of well-known projects have emerged, including mature solutions that have crossed the theoretical gap and become the cornerstone of the trillion-level ecosystem, as well as experimental protocols that are still in the early stages of proof-of-concept and exploring the boundaries of consensus in the heated debate in the crypto community. This article will deeply deconstruct the three core battlefields of Bitcoin ecosystem development and present a panoramic picture of Bitcoin ecosystem revolution and innovation as much as possible.

1. Network Expansion

1. Origin of the Problem

Since Bitcoin uses a fixed block size and a block time of about 10 minutes, the Bitcoin network can only process about 7 transactions per second on average, which is not only far lower than traditional payment systems (such as Visa, tens of thousands of transactions per second), but also far inferior to the transaction capacity of other public chains (such as Solana, thousands of transactions per second). During peak trading periods, the Bitcoin network is prone to congestion, resulting in delayed transaction confirmation. When the main network is congested, transaction fees will also surge, and a single transaction may be as high as tens of dollars.

Figure 1 : Real-time TPS comparison of mainstream public chains

Data source: Chainspect (March 16, 2025)

2. Solution

Bitcoin network expansion refers to a solution that uses technical means to improve transaction processing capabilities and reduce transaction fees without sacrificing the security and decentralization of the Bitcoin network. Network expansion ideas can be divided into two categories: on-chain expansion and off-chain expansion.

1. On-chain expansion

On-chain expansion aims to modify the main chain protocol and optimize data storage and verification methods, thereby improving block payload and efficiency to a certain extent. The core is around block space efficiency and protocol rule innovation. The mainstream on-chain expansion solutions can be further divided into the following according to the technical path:

( 1 ) Block capacity adjustment

When Bitcoin was first designed, Satoshi Nakamoto added a 1MB capacity limit to each block. This capacity limit became one of the key factors that limited the efficiency of the Bitcoin network in the future. Therefore, directly increasing the Bitcoin block capacity (such as from 1MB to 2MB or higher) became the initial solution for expanding the Bitcoin network.

In 2015, Gavin Andresen and Mike Hearn proposed the XT version of Bitcoin (Bitcoin XT), attempting to increase the block size to 8M. However, the Bitcoin community (Core team) believed that if the block size increased, it would make it more expensive for ordinary users to run Bitcoin nodes, which would lead to companies hosting nodes in data centers, resulting in node centralization, violating Satoshi Nakamoto's "light node" design principle, and refused to "simple and crude" expand the Bitcoin block.

The party pushing for "big blocks" and the party sticking to "small blocks" have been unable to reach a consensus. Finally, in 2017, a group of miners led by Wu Jihan promoted the "hard fork" of the Bitcoin network. They modified the blockchain protocol. The modified protocol allows the block limit to be increased from 1MB to 32MB, a single block can accommodate more transactions, and the theoretical TPS is greatly increased to 100-200. Since the modified protocol is no longer compatible with the old version, a new currency, Bitcoin Cash (BCH), has been created to coexist with the original protocol (Bitcoin).

BCH was warmly welcomed by the mining community at the beginning of its birth. However, due to its increased storage/bandwidth threshold, the number of full nodes is only about 1% of Bitcoin, and the degree of decentralization has dropped significantly.

From the perspective of market value, in 2018, the BCH to BTC exchange rate was about 0.18 at its peak; but now each BCH can only be exchanged for about 0.004 BTC. This shows that the BCH block capacity adjustment plan has been gradually abandoned by the Bitcoin community.

Figure 2 : BCH/BTC exchange rate

 Data source: TradingView (March 16, 2025)

In addition to the "radical plan" of comprehensively increasing the capacity of all Bitcoin blocks, early community members have also proposed a compromise plan to dynamically adjust the block capacity. The core idea is to automatically adjust the block upper limit according to the network load to avoid the rigidity of the fixed value. However, this type of proposal was also not adopted by the Bitcoin network due to community disagreements.

( 2 ) Block space optimization

In addition to the solution of directly adjusting the block capacity, some developers have also proposed optimizing the block space to improve the efficiency of the Bitcoin network. Currently, the solutions that have been widely adopted are mainly Segregated Witness (SegWit) and Taproot.

SegWit was officially implemented in 2017 to improve the transaction processing capacity of the Bitcoin network by reorganizing transaction data. It separates witness data from transaction data and stores it in a separate part of the block. This can reduce the amount of data in a single transaction, thereby accommodating more transactions without increasing the block size, directly increasing the on-chain throughput to about 10-15 TPS. SegWit has been widely accepted by the Bitcoin community since its inception. The vast majority of wallets and exchanges support SegWit addresses (Nested SetWit addresses designed for compatibility with old wallets start with 3, and Native SegWit addresses for native isolated witnesses start with bc1), which effectively improves transaction speed and scalability while reducing transaction fees.

Taproot is a major upgrade implemented in 2021. The upgrade actually includes three proposals: BIP340, BIP341, and BIP342. It combines technologies such as Schnorr signatures and Merkelized Abstract Syntax Tree (MAST) to improve transaction privacy, efficiency, and scalability. Taproot allows multiple signatures to be merged into one signature, simplifying the transaction verification process while hiding complex transaction details such as multi-signature and time lock conditions. Taproot improves the privacy and flexibility of Bitcoin transactions, especially in multi-signature transactions and lightweight smart contract scenarios. However, its effect on throughput improvement is limited, and the main optimization focuses on functional expansion rather than capacity breakthroughs.

Figure 3 : SegWit usage in Bitcoin network transactions

Data source: River, txstats (as of 2024)

2. Off-chain expansion

Off-chain expansion improves throughput without changing the main chain protocol through the architecture of off-chain transaction processing + main chain final settlement, and the core solution is to balance "decentralized security" and "performance expansion". The mainstream off-chain expansion solutions can be further divided into the following according to the technical path:

( 1 ) State Channel

State Channels is essentially a Layer 2 solution. Its principle is to establish a multi-party trusted channel off-chain and interact with the main chain only when the channel is opened and closed. The two parties to the transaction conduct high-frequency and low-cost transactions in the channel, and the final state is submitted to the main chain for settlement only when the channel is closed or one party wants to withdraw funds from the channel.

The most well-known state channel practice is the Lightning Network, which has received widespread attention and application since its launch. Currently, many Bitcoin wallets and payment platforms support the Lightning Network, which performs well in increasing transaction speed and reducing transaction costs, especially for micropayment scenarios. Its advantages are that it inherits the security of the kings and has extremely low off-chain transaction fees; its disadvantages are that it only supports simple payments and is difficult to meet more complex application requirements. In addition, the funds used in the Lightning Network need to be locked in advance and are limited to transactions between channel participants.

As of now, the number of active nodes in the Lightning Network exceeds 10,000, the number of channels exceeds 40,000, and the funds deposited in the Lightning Network amount to thousands of BTC.

Figure 4 : Bitcoin Lightning Network Data Panel

Data source: 1ML (March 16, 2025)

( 2 ) Sidechain

Sidechains are a type of blockchain that is independent of the Bitcoin main chain and is connected to the Bitcoin main chain through a two-way anchor mechanism. Users can transfer Bitcoin from the main chain to the sidechain for transactions, and then return the transaction results to the main chain. Sidechains can have different consensus mechanisms and transaction rules, thereby achieving higher transaction speeds and richer functions. One of the earlier projects exploring the development of sidechains is Rootstock.

Rootstock (RSK) was launched in January 2018 and is the first EVM-compatible sidechain on the Bitcoin network. The native token in Rootstock is a Bitcoin-pegged coin, Smart BTC (RBTC), which is also used to pay transaction fees. Rootstock's main innovations include merged mining and a two-way bridge mechanism. Merged mining means that the Rootstock blockchain uses the same PoW consensus algorithm as Bitcoin, and Bitcoin miners can mine Bitcoin and Rootstock blocks at the same time, increasing the profitability of miners without additional resources. The two-way bridge (Powpeg) supports seamless conversion between Bitcoin and RBTC, allowing Bitcoin to be freely transferred between the two while reducing transaction costs.

There are two main bottlenecks that restrict the development of Rootstock. First, the security of the side face depends on its own consensus, which requires users to trust its security; second, the ecosystem is not mature enough and lacks sufficient participation from developers, partners and users. Therefore, after years of development, the peak TVL of Rootstock is only about 200 million US dollars.

Figure 5 : Rootstock network TVL changes

Data source: DefiLlama (March 16, 2025)

( 3 ) Rollup

Rollup technology improves transaction throughput by processing transactions off-chain and submitting compressed transaction data to the Bitcoin main chain. According to different verification methods, the two main types of Rollup are Optimistic Rollups and ZK Rollups. Optimistic Rollups assumes that transactions are valid and only verifies them when disputes arise; ZK Rollups verifies each transaction through zero-knowledge proof technology.

Rollup technology has been widely used in blockchains such as Ethereum, so there are also many projects exploring its application in Bitcoin off-chain expansion. In December 2023, Robin Linus published a white paper titled "BitVM: Compute Anything On Bitcoin", in which he first proposed the concept of BitVM. The design concept of BitVM is similar to Optimistic Rollup, based on fraud proofs and challenge-response protocols, but does not require modification of Bitcoin's consensus rules. The underlying primitives of BitVM are simple, mainly based on hash locks, time locks, and large Taproot trees. BitVM moves 99% of the computation off-chain, and only verifies fraud proofs on-chain in case of disputes, which not only utilizes the security of the Bitcoin main chain, but also avoids congestion and high costs.

In addition to Optimistic Rollup, some developers have also tried to introduce ZK Rollup into the Bitcoin ecosystem. This technology is at a critical stage of technological breakthrough and ecological germination. Its core value is not only capacity expansion, but also the activation of Bitcoin's programmability. However, as of now, it is still technically infeasible to build ZK Rollup on Bitcoin, and it is necessary to change the Bitcoin network through soft forks and other methods.

3. Comparison of solutions

Table 1 : Comparison of on-chain expansion solutions

 Information source: This article summarizes

Table 2 : Comparison of off-chain expansion solutions

 Information source: This article summarizes

2. Smart Contracts

1. Origin of the Problem

Bitcoin was originally designed as a decentralized digital currency with a relatively simple scripting language, which improves security but also limits its functionality. For example, applications such as automated payments, multi-signature transactions, and time-locked transactions all require the cooperation of smart contracts. With the development of blockchain technology, other public chains such as Ethereum and Solana have achieved a rich application ecosystem through smart contracts, resulting in the long-term lag of Bitcoin TVL. If it is not upgraded, it will face the risk of losing users and developers for a long time. Therefore, Bitcoin's demand for smart contracts is essentially an inevitable choice for the evolution from "digital gold" to "digital infrastructure."

Figure 6 : TVL comparison of mainstream public chains

Data source: DefiLlama (March 16, 2025)

2. Solution

The current Bitcoin network does not have the technical foundation to support smart contracts, and the UTXO data structure itself cannot achieve a state as complex as the Ethereum account model. Therefore, most of the current Bitcoin smart contracts are implemented through ecological projects. Therefore, smart contracts and network expansion have become two sides of the same coin in the development of the Bitcoin ecosystem: smart contracts involve multi-step conditional judgments (such as loan settlement, option exercise), and the amount of data in a single transaction far exceeds that of ordinary transfers, so network expansion is needed; and expansion technology not only increases Bitcoin's transaction throughput and reduces transaction costs, but also provides a better foundation for the operation of smart contracts. Many Layer 2 solutions directly assume the responsibility of smart contract operations.

Currently, the ideas for introducing smart contracts into the Bitcoin ecosystem can be divided into two categories: main network enhancement and external chain expansion.

1. Mainnet Enhancement

The technical idea of the mainnet enhancement is to use soft forks to upgrade the Bitcoin protocol, optimize script capabilities, and implement "non-Turing complete but practical" smart contract functions on the UTXO model. For example, the Taproot upgrade mentioned in the network expansion section brings a series of advanced functions, optimizes transaction scripts through Schnorr signatures and MAST, and provides basic support for Bitcoin smart contracts. It is also because of the Taproot upgrade that the Ordinals protocol was launched, which realized the casting of NFTs on the smallest unit of Bitcoin, "Satoshi", created a new digital asset, and brought NFT functions similar to those on Ethereum to the Bitcoin network.

In addition to the Taproot upgrade, other community members have proposed various ways to upgrade the Bitcoin network to support smart contract functions. For example, in 2024, BIP347 mentioned a script function called OP_CAT, which can connect two data items into one, helping developers simplify the verification logic when building complex multi-signature and time-lock contracts. In fact, OP_CAT existed in early versions of Bitcoin, but was disabled by Satoshi Nakamoto in 2010 because of potential security issues. Although some developers support the restoration of OP_CAT, they believe that Bitcoin has been able to eliminate unsafe factors after years of iteration and improvement, and the activation of this script will greatly expand the use scenarios of Bitcoin, especially in the fields of NFT and DeFi. However, most community members still oppose the proposal, especially when Bitcoin has developed to its current status and cannot withstand any potential security risks.

From the case of OP_CAT, we can also see that the biggest difficulty in enhancing the Bitcoin mainnet is the need to gather the consensus of a large decentralized community, so any upgrade may be very cautious and slow. In particular, many "Bitcoin fundamentalists" firmly maintain the "purity" of the Bitcoin mainnet, and even do not think that Bitcoin needs to be expanded and increased in speed, and are angry about the actions of Ordinals that fill the mainnet with "garbage".

Figure 7 : OP_CAT code example

Information source: BIP-347

2. External link expansion

The technical idea of external expansion is to build an independently operated blockchain, interact with the Bitcoin main network through a two-way anchoring mechanism, and support smart contract functions. This is consistent with the idea of network expansion solutions for side chains or Rollups. In fact, most side chains and Layer2 solutions cover the functions of smart contracts.

One of the representative projects of the external chain expansion solution is Stacks. The technical mechanism of Stacks is designed to be similar to the Bitcoin sidechain. Its innovation lies mainly in the Proof of Transfer (PoX) mechanism, which is similar to the staking system of PoS and includes two participants: miners and signature verifiers. Miners get the opportunity to write new blocks on the Stacks chain by participating in transactions on the Bitcoin chain. This requires them to send transactions on the Bitcoin chain in each round and be randomly selected by VRF to become the leader. Each Bitcoin block corresponds to a Stacks miner, who has the right to produce all Stacks blocks during his term of office. After the miner adds the transaction, the signer verifies the signature. After more than 70% of the signers verify that it is valid, the new block can be added to the Stacks chain. Stacks interacts with the Bitcoin mainnet through the "chain anchoring" mechanism, binding the Stacks chain information to the Bitcoin mainnet to ensure that the state changes can be verified on the Bitcoin mainnet.

The Stacks ecosystem has developed rapidly in recent years, attracting many DApp, NFT and DeFi projects. Its model based on Bitcoin security has also brought new ideas to the industry. In recent years, the team has also upgraded the chain. The two most important innovations are the Nakamoto upgrade and the launch of sBTC. The Nakamoto upgrade brings Stacks into the Bitcoin Layer2 era from a technical basis, attempting to share the security of the Bitcoin mainnet and solve the security problem of the Stacks chain; and the launch of sBTC has made preparations for the construction of its Layer2 ecosystem.

Figure 8 : Bitcoin Ecosystem External Chain Expansion TVL

Data source: Footprint Analytics (March 16, 2025)

3. Other exploratory solutions

In addition to the mainstream paths of mainnet enhancement and external link expansion, some exploratory solutions are being discussed and studied.

For example, the RGB protocol adds status information to Bitcoin’s UTXO model through a “client-side smart contract” solution, allowing asset issuance and more complex contract logic to be implemented without changing the Bitcoin core protocol.

RGB++ further attempts to entrust RGB's asset status, contract release and transaction verification to the CKB public chain. Since CKB itself is an extended UTXO model (Cell), the off-chain information of RGB assets can be written into the Cell, and a one-to-one mapping relationship can be established between the Cell and Bitcoin UTXO, realizing the CKB-based RGB asset data custody and verification solution to solve the usability problem.

In addition, the Drivechain project advocates the use of a two-way anchoring mechanism to allow the Bitcoin main chain to interact with multiple functional side chains. Drivechain allows for customized sidechain protocols, sharing Bitcoin security through "hash rate hosting" and "joint blind mining". It allows the creation of dedicated sidechains (such as privacy chains, storage chains), anchoring assets to Bitcoin, and may support a variety of smart contracts and functional expansions in the future.

In addition to the above cases, there are many exploratory schemes that hope to expand the functional boundaries of Bitcoin in theory. However, most of them are still in the proof-of-concept stage and are not yet mature for practical application.

3. Comparison of solutions

Table 3 : Comparison of smart contract solutions

 Information source: This article summarizes

(IV) Specific applications

Smart contracts in the Bitcoin ecosystem have developed rapidly in recent years, mainly focusing on Ordinals protocols, DeFi, and infrastructure. The following are some representative tracks and projects:

1. Ordinals /BRC-20/NFT track

Smart contract standards based on the Bitcoin UTXO model (such as BRC-20), which support NFT, token issuance and ordinals, are the core innovation direction of the Bitcoin ecosystem.

Well-known projects in this track include:

Ø TurtSat: Bitcoin Ordinals' mainstream "launchpad", cooperating with many companies to incubate projects and provide token and NFT issuance services. It has launched many high-quality projects.

Ø Bounce: A decentralized auction platform that supports token and NFT auctions. Tokens have been listed on mainstream exchanges and it has incubated the stablecoin protocol BitStable.

Ø ALEX: A trading platform based on Bitcoin and Stacks, supporting AMM trading of BRC-20 assets. Its vision is to integrate Bitcoin and Stacks ecosystems and promote BRC-20 liquidity.

2. DeFi protocol track

DeFi applications such as lending, stablecoins, and transactions in the Bitcoin ecosystem are in an early but rapidly growing stage.

Well-known projects in this track include:

Ø BitStable: Bitcoin ecosystem stablecoin protocol, issuing DAII stablecoin (1:1 anchored to USD), supporting mortgage of BRC-20 or ERC-20 assets. DAII can cross-chain to Ethereum to exchange for USDT/USDC.

Ø BendDAO: Ethereum NFT lending protocol, extended to Bitcoin ecosystem, supports Bitcoin NFT lending wBTC liquidity pool. Plans to achieve seamless interaction between Bitcoin NFT and the platform.

Ø Taproot Assets: A meta-protocol based on the Lightning Network, used to issue assets within the Bitcoin system, and assets can be transferred within the Lightning Network to achieve timely, high-capacity, and low-fee transactions.

3. Infrastructure track

The Bitcoin ecosystem infrastructure is still imperfect. In addition to centralized exchanges and lending protocols, development tools, oracles and other projects are also very scarce. Only the improvement of infrastructure can promote the prosperity and development of the ecosystem.

Well-known projects in this track include:

Ø Chainlink: A mainstream oracle network that has been expanded to the Bitcoin ecosystem, providing data services for BRC-20 tokens and NFTs. Its security has been verified, but its expansion to the Bitcoin ecosystem requires integration with other protocols (such as Stacks).

Ø Dova Protocol: Provides liquidity support for assets in the Bitcoin ecosystem, improves the liquidity and utilization of assets, and promotes the development of the ecosystem.

Ø Nubit: Bitcoin’s native data availability layer, which optimizes data storage and verification efficiency through the BRC-1310 standard and reduces the cost of smart contract execution

Figure 9 : Bitcoin ecosystem at a glance

Source: HC Capital

3. Cross-chain bridging

1. Origin of the Problem

The demand for Bitcoin network to cross-chain with other public chains stems from the fragmentation of the blockchain ecosystem. With the rapid increase in the number of public chains (currently over hundreds), it is difficult for assets, data and functions between chains to be interoperable, forming "value islands". As the largest encrypted asset by market value, Bitcoin has an urgent need to cross-chain, aiming to break its own functional limitations and achieve asset circulation, data interaction and application expansion with other chains.

2. Solution

The core of Bitcoin cross-chain is to realize cross-chain verification and transfer of assets and data. The main technical paths include: relay, atomic exchange, zero-knowledge proof, etc.

1. Relay

The relay cross-chain solution is a technical path that verifies Bitcoin main chain transaction data on the target chain through light nodes or verification mechanisms. Its core logic is to synchronize data to the target chain by monitoring key information of the Bitcoin main chain (such as block headers and transaction hashes), thereby achieving cross-chain asset transfer. The relay solution is usually combined with a side chain or a second-layer network to solve the scalability and functional limitations of the Bitcoin main chain.

BTC Relay is an early relay solution, supported by the Ethereum Foundation, and is the first infrastructure to achieve cross-chain verification between Bitcoin and Ethereum. By deploying light nodes on the target chain (such as Ethereum), Bitcoin block header information can be verified to achieve cross-chain asset transfer. In recent years, popular projects that use relay solutions include Liquid Network, which uses a consortium chain architecture and relay nodes to verify main chain data. L-BTC is issued through two-way anchoring, supporting fast transactions and privacy protection. The project focuses on financial institution scenarios and provides high-frequency trading and cross-chain asset transfer capabilities.

2. Atomic Swaps

Atomic Swaps is a cross-chain asset exchange technology that does not require an intermediary. It mainly relies on the Hash Time Lock Contract (HTLC). The Hash Time Lock Contract realizes the exchange of cross-chain assets through the combination of "hash lock" and "time lock". Its core logic is: the two parties to the transaction lock assets on their respective chains, and ensure the synchronization of the transaction through the shared random number hash value and time limit. If the verification is not completed within the time limit, the assets will be automatically returned.

AtomicDEX is a well-known project that uses the atomic swap solution. It is a multi-asset, cross-chain decentralized trading platform developed by Komodo. It supports direct exchange of multiple currencies without centralized custody, and users can freely and securely exchange assets between different public chains. The project supports assets on Bitcoin, Ethereum, and multiple other chains. However, after years of development, the project has not yet taken over the mainstream market. Possible reasons include the complexity of actual applications, only allowing connection through mnemonics or hardware wallets, and the exchange rate provided is much different from the relay solution.

3. Zero-knowledge proof

The zero-knowledge proof (ZKP) cross-chain solution uses cryptographic technology to verify the authenticity of cross-chain assets or messages without exposing transaction details, achieving efficient and secure cross-chain interoperability. The prover generates a concise mathematical proof (such as zk-SNARKs) to prove to the verifier that a transaction or state change actually occurred on the source chain without revealing specific data. Through zero-knowledge proof, the receiving chain can directly verify the transaction or state of the source chain to ensure the atomicity and security of cross-chain operations. Relying on distributed verification nodes or light clients (such as zk-LightClient) reduces dependence on third-party intermediaries. In the eyes of many people, zero-knowledge proof is the ultimate solution for Bitcoin cross-chain.

Polyhedra Network (zkBridge) is a cross-chain protocol based on zk-SNARKs, which supports asset transfer and message delivery between Bitcoin and 20+ public chains (such as ETH and Polygon). The authenticity of cross-chain operations is ensured by verifying Bitcoin Merkle proofs. The project does not require any trust in third parties, is compatible with Bitcoin ecosystem assets such as Ordinals and BRC-20, and is integrated with infrastructure such as EigenLayer and Babylon. It has processed tens of millions of cross-chain transactions and supports interoperability between the Bitcoin Layer 2 network and other chains.

Figure 10 : Number of wBTC users on each mainstream public chain

Data source: Dune (March 16, 2025)

3. Comparison of solutions

Table 4 : Comparison of cross-chain bridging solutions

 Information source: This article summarizes

Conclusion

Looking back from the time point of 2025, Bitcoin’s paradigm revolution is undoubtedly a milestone in the history of blockchain technology development. From network expansion, smart contracts to cross-chain bridging, innovations in every key area are injecting new vitality into the Bitcoin ecosystem, pushing it from a single “digital gold” to a diversified “digital infrastructure”.

Network expansion is the cornerstone of this revolution. Whether it is SegWit and Taproot for on-chain expansion, or Lightning Network and Rollup technology for off-chain expansion, these solutions have improved Bitcoin's transaction processing capabilities and efficiency in different dimensions. SegWit has increased Bitcoin's transaction capacity by about 50% by optimizing the transaction data structure, while Taproot has taken an important step in privacy and function expansion. Lightning Network and Rollup technology for off-chain expansion provide efficient solutions for high-frequency transactions and complex applications. The coordinated development of these technologies enables the Bitcoin network to cope with growing user demand while maintaining its core characteristics - decentralization and security.

The introduction of smart contracts is the key to the expansion of Bitcoin's ecological functions. Through the enhancement of the main network and the expansion of external chains, Bitcoin is gradually realizing the transformation from simple accounting to complex financial contracts. The Taproot upgrade has laid the foundation for Bitcoin smart contracts, while external chain projects such as Stacks have brought rich smart contract functions to Bitcoin through side chains and Layer2 technologies. These innovations not only meet basic needs such as automated payments and multi-signature transactions, but also provide possibilities for advanced applications such as DeFi and NFT. The development of Bitcoin smart contracts marks its evolution from "digital gold" to "digital infrastructure", opening up new frontiers for the application scenarios of blockchain technology.

Cross-chain bridging technology is the bridge for the expansion of the Bitcoin ecosystem. Solutions such as relays, atomic swaps, and zero-knowledge proofs enable Bitcoin to achieve interoperability of assets and data with other public chains. Relay projects such as Liquid Network ensure the security of cross-chain asset transfers through light node verification; atomic swap projects such as AtomicDEX achieve cross-chain asset exchange without intermediaries through hash time lock contracts; and zero-knowledge proof projects such as Polyhedra Network provide efficient and secure cross-chain solutions through cryptographic technology. The integration of these technologies not only breaks the fragmentation problem of the blockchain ecosystem, but also creates conditions for the extension of Bitcoin's value network to other public chains.

Looking ahead, this paradigm revolution in the Bitcoin ecosystem is still ongoing. The rapid development of network expansion, smart contracts, cross-chain bridging, and more areas will bring Bitcoin a wider range of application scenarios and more powerful functions. With the continuous advancement of technology and the continuous innovation of the community, Bitcoin is expected to play a greater role in decentralized finance, international trade, and other fields, and become the underlying operating system supporting digital civilization.

The depth and breadth of this revolution are reshaping people's cognitive boundaries of Bitcoin. From the initial digital gold to today's smart contract platform and multi-chain interoperability hub, every step of Bitcoin's evolution embodies the wisdom and efforts of developers around the world. While protecting its core values - decentralization and security, Bitcoin's future journey is full of infinite possibilities by making its value benefit a wider range of people through technological innovation. We have reason to believe that this cypherpunk experiment born in crisis will eventually become the cornerstone of digital civilization and lead us to a more open, transparent and trustworthy future.