BTC Scaling Approaches

Classical Lightweight Protocols (2012-2014)

The earliest BTC Scaling protocols were primarily lightweight on-chain native designs, with the main representatives being Colored Coins and Client Side Validation technology. Colored Coins[1] cleverly embed special transactions within general transaction blocks, which are then packaged by BTC miners into the transaction pool for global network validation. Due to the embedding of transaction information within blocks, a special client is usually required to extract useful data for reconstructing transactions and states.

On-chain coloring and client-side validation technology are lightweight to deploy and don't require any branch fork. However, due to the limitations of on-chain computation and storage, they are only suitable for very simple transaction scenarios.

Off-Chain and Large Block Fork (2015-2021)

To enhance BTC throughput performance, off-chain scaling and hard fork upgrades became two mainstream development directions. The former is designed to anchor BTC's native security, while the latter relies on a new PoW network. Off-chain scaling evolved from the Lightning Network[2] to RGB sidechain[3], starting to support complex VM computing, greatly expanding BTC's throughput and programmability. However, off-chain asset security still remains a big challenge for users.

Hard fork upgrades with larger blocks are more direct and simple, but the new PoW network is independent from BTC, the scale of decentralization directly impacts the security and robustness of the new network.

A particularly special large block fork is ETH, which built the EVM on top of BTC's basic protocol and formed a large PoW network independently. Especially with the emergence of large-scale DeFi applications in 2019, developers' attention was largely drawn to ETH for development. During this phase, ETH has become the most popular developer platform,while other BTC scaling solutions gradually faded from developers' view.

BTC Scalability Renaissance (2022-2024)

With ETH 2.0's shift to the PoS consensus protocol in 2022, bringing controversy over consensus security, and the slowdown in DeFi innovation, developers are once again turning their attention to the stable and slow-moving BTC ecosystem. Currently, BTC's capital value is 10 times that of ETH, but its developer ecosystem is sparse, implying greater potential growth. The Ordinals Inscription[4] innovation at 2023 is a continuation and homage to Colored Coins, reopening the path to BTC's revitalization. From the design philosophy of Ordinals, maximizing on-chain scaling with security guarantee has attracted significant developer attention. Under this trend, the acceptance of forked chains or independent PoW networks has decreased significantly. The consensus remains that BTC is the most secure transaction network.

Inspired by this trend, the concept of BTC L2, referencing ETH L2 architecture, has gained widespread attention. This architecture is relatively mature in the ETH ecosystem, but the lack of on-chain contract verification in BTC poses greater challenges for security protocols. Theoretically, it still doesn't solve the security issue of asset cross-chain transfers on the second layer.

In addition to the complex BTC L2 design concept, suggestions for upgrading BTC OP Code have resurfaced in the last year. The advantage is native on-chain scalability with higher security than L2. However, limited by BTC's lightweight architecture design, new BIPs require long-term, thorough discussion and consensus before being updated and launched on the mainnet.

Phase	Design Idea	Technical Path and Progress
Classical Lightweight Protocols	Colored Coins On-chain scaling	2012 Yoni Assia first proposed the concept of Colored Coins: bitcoin 2.X (aka Colored bitcoin) 2014 ChromaWay - Embeddable Order-Based Coloring Protocol (EPOBC), the first OP_RETRUN usage protocol 2013 J.R. Willett proposed MasterCoin, off-chain node state maintenance 2013 Peter Todd proposed client-side validation technology: Disentangling Crypto-Coin Mining: Timestamping, Proof-of-Publication, and Validation + single use seal
Off-Chain and Large Blocks	Sidechains Forked Chains Lightning Network	2016 Lightning Network proposed (Joseph Poon and Thaddeus Dryja released the Lightning white paper, based on Satoshi Nakamoto's early proposal) 2015 Giacomo Zucco proposed the RGB architecture (introduced VM on top of SUS) 2023 Prime (improved sidechain of RGB), enhances transaction confirmation time (10mins -> 10s) 2024 CKB RGB++ proposal <br> 2018 Sidechains Liquid, RSK launched 2014 Vitalik Buterin published the Ethereum white paper, introducing the EVM virtual machine design on the POW foundation (A Next Generation Smart Contract And Decentralized Application Platform) 2017 BCH/BSV block size increase 2021 SmartBCH EVM compatible chain launched
	Ordinal BRC	2023 NFT protocol implemented based on BTC Witness data area
BTC Scalability Renaissance	L2s	2024 STX mainnet upgrade, primarily based on BTC block anchoring verification technology 2023 bitVM white paper released (ZeroSync), based on ZKP for security verification
	OP Code	Babylon, Chakra, etc. propose adding new OP Codes