A New Opportunity Emerges? What is the Controversial Bitcoin Rollup?

What is Bitcoin Rollup and why is it controversial?

The Ordinals protocol has led to a Bitcoin NFT craze, which is driving a new transformation in the Bitcoin ecosystem, and more and more participants are exploring Bitcoin’s scalability issues.

We have introduced Bitcoin’s second-layer scaling solutions such as “Lightning Network”. In addition to the above solutions, applying the Rollup protocol to Bitcoin to improve scalability is also attracting more attention.

Bitcoin’s Rollup

When it comes to Rollup, Ethereum is usually associated with it.

However, in October 2022, John Light released a report

Validity Rollups on Bitcoin, demonstrating the feasibility plan and application methods of applying Rollup protocol to Bitcoin.

Note: The report “Validity Rollups on Bitcoin” can be viewed at the following URL: https://bitcoinrollups.org

Bitcoin is built on a relatively simple blockchain architecture and hopes to allow all users to run “nodes” on the chain. When necessary or necessary, users can also easily become developers of blocks on the chain.

However, if a blockchain is committed to making “all” users run full nodes on the chain easily, it must establish rules to restrict the computational power when verifying blocks on the chain.

This contradiction is actually the contradiction between decentralization and the scale of computing power distribution. With the development of Bitcoin, this tension has become more and more obvious, and the key solution to ease this tension is to improve the scalability of the blockchain.

Currently, the high-profile solutions for improving scalability include sharding, on-chain optimization, or off-chain channel settings. “Lightning Network” is a solution that builds payment channels off-chain, aggregates them for on-chain settlement, and achieves expansion by reducing the number of transactions; while the solution that applies the Rollup protocol is a solution that attempts to place as little data as possible on the chain while keeping transaction execution off-chain.

The difference between the two is that the large amount of transaction data in “Lightning Network” is saved off-chain, but deploying the Rollup protocol does not mean that a large amount of transaction data is placed off-chain for processing. It is still an expansion solution for optimizing data on the chain.

Bitcoin Rollup Layered Display Example Chart  Source/bitcoinrollups.org

The above figure shows the layered application of the Rollup protocol on Bitcoin: there are 2 Rollup protocols on the second layer of Bitcoin, one for providing data availability and one for providing secure payments and contracts; There are also 3 Rollup protocols on the third layer of Bitcoin, each for different use cases, including P2P payments, financial contracts, and game asset transfers.

Rollkit modular development framework, source/rollkit.dev

Application Prospects

The active deployment of Rollup on Ethereum has gradually changed the perception of blockchain users about Ethereum-based transactions, data storage, and on-chain verification.

Although Rollup deployment on Bitcoin is still in its early stages, with the evolution of development tools like Rollkit, perhaps in the near future, Rollup will also bring more new paradigms worth exploring to the Bitcoin community.

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