Forward the Original Title ‘Current Status of Bitcoin Scaling Solutions and Major Bitcoin Upgrades🪂’

This is a hardcore article, but I observe a huge narrative quietly brewing. Many people are unaware that BTC has completed a significant soft fork, Bitcoin Thunderbolt, which introduces native programmability to Bitcoin. Those who understand will naturally know what this means, and those who don’t will understand after reading this. Big changes are coming!

1. The Dilemma of Lacking Native Scaling Solutions

Bitcoin is globally renowned for its unparalleled security, but its scalability limitations have prevented the full potential of the assets on the Bitcoin chain from being realized. The introduction of the Ordinals protocol has sparked expectations about Bitcoin’s scaling potential and brought new development opportunities to the Bitcoin ecosystem. Against this backdrop, several scaling solutions have emerged, attempting to unlock the potential of on-chain assets and promote the prosperity of the on-chain ecosystem.

However, existing scaling solutions often sacrifice Bitcoin’s native nature, introducing additional trust costs and security risks. While these solutions have attracted a small group of users through incentive mechanisms, creating some market enthusiasm in the short term, as the incentives fade, these participants lose interest and gradually exit. A recent example is Babylon, which suffered a setback after its airdrop. Within just 24 hours of its launch, over $21 million worth of BTC was withdrawn from the protocol. The reason lies in Babylon’s technical solution, which required BTC to be locked up in exchange for sidechain assets, preventing Bitcoin assets on the main chain from being used directly. This approach weakened its appeal to native Bitcoin users, and once participants received their airdrops, they quickly left.

Another popular project, Bitlayer, faced the same fate. Promoted as the “fastest-growing Bitcoin Layer 2,” it too lost its momentum after the frenzy of its incentive mechanism ended. Participants, focused more on short-term gains than long-term engagement in the ecosystem, abandoned it. Since Bitlayer users must convert their BTC into on-chain tokens via a custodial bridge, it relies heavily on third-party custody, introducing potential risks. Once the profits were gone, users quickly moved their BTC out.

In conclusion, it has been proven that scaling solutions that deviate from Bitcoin’s native nature have very limited appeal to Bitcoin users and do not represent a true solution.

2. Native Enhancement: The True Direction of Bitcoin Scaling

There is growing awareness that only by making changes directly at the Bitcoin protocol layer can the bottleneck truly be overcome. One approach, represented by @nubit_org, is attracting attention. Nubit has promoted Bitcoin Thunderbolt—a soft fork to the Bitcoin base layer, which directly modifies the Bitcoin protocol to provide higher transaction speeds and programmability. For instance, with the UTXO Bundling technology, transaction speeds are 10 times faster than traditional Bitcoin; the introduction of the OP_CAT opcode enables the direct development of applications on Bitcoin, achieving native programmability; Goldinals integrates BRC-20, Runes, and Ordinals standards, unifying asset protocols; and BitMM enables trustless on-chain transactions.

This scaling solution is “on-chain,” meaning native BTC can directly participate in smart contracts and transactions without the need for cross-chain wrappers or substitutes. Nubit’s native scaling solution eliminates the need for traditional cross-chain bridges, with validation completely occurring on-chain and no third-party custodial risks.

3. Comparison of Path Advantages and Disadvantages

To help readers better understand the differences between native scaling solutions and alternative scaling solutions, we have created a table for a quick overview.

From this comparison, it is clear that the advantages of “native” solutions are comprehensive: in terms of security, they eliminate intermediaries and have almost zero trust costs; in asset utilization, they avoid wasting Bitcoin’s liquidity; and in ecosystem development, they resonate in sync with Bitcoin’s growth. Of course, the challenge with native solutions lies in their higher implementation difficulty, often requiring consensus within the Bitcoin community (such as a soft fork upgrade) for successful deployment. This means that the native path may progress more slowly, requiring strong technical justification and community mobilization.

4. The Importance of “Native” for Bitcoin’s Value Capture

In addition to the feasibility of scaling solutions, native solutions are also crucial in driving the value of the Bitcoin ecosystem.

1.Security Spillover Effect

Non-native scaling solutions conduct a large number of transactions and fees on other chains, with only a few locking/unlocking transactions visible on the Bitcoin mainnet. Bitcoin itself does not gain any profit from these Layer 2 transactions, and in the long run, this does not directly enhance the security or value support of the mainnet. Native scaling solutions, on the other hand, allow transaction activities to occur directly on the Bitcoin mainnet. Every transaction generates fee revenue for Bitcoin miners, thereby strengthening the security budget and hash rate stability of the Bitcoin network. This effect becomes particularly crucial for maintaining security after Bitcoin’s future halving, where transaction fees will be the main security mechanism.

2.Value Attribution

Babylon and Bitlayer each have their own native tokens, which serve as payment for fees or governance functions. A portion of the ecosystem value is captured by these new tokens, diluting Bitcoin’s position as the sole value carrier. For example, Babylon users focus more on the price and returns of the BABY token rather than Bitcoin itself; Bitlayer’s DeFi ecosystem may see the rise of contract and governance tokens on its chain, with BTC only serving as collateral. In the long run, if the innovative gains of Bitcoin are captured by other tokens, it is not ideal for pure BTC investors. Native scaling solutions, however, use BTC directly as the pricing and settlement asset for all applications. Whether issuing tokens, NFTs, or running decentralized applications, the underlying consumption is all in BTC. The demand for BTC rises as the ecosystem thrives, and BTC holders benefit from this growth.

In summary, “native” means that Bitcoin’s intrinsic value can participate and amplify, whereas non-native solutions may cause value to spill over. For investors who believe in Bitcoin’s long-term value, native solutions undoubtedly align more closely with their interests.

5. The Final Word

By comparing existing scaling solutions, the native scaling path stands out for its unique advantages. It not only solves the scalability bottleneck of Bitcoin but also preserves its security and trustless features. This immense innovation is nurturing a narrative with explosive potential, which is highly worth further analysis and follow-up by all investors. As the implementer of Bitcoin Thunderbolt, Nubit’s native scaling approach brings a major upgrade to Bitcoin, making it the first Bitcoin project acknowledged by HSBC in their latest report.

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