Current Status and Future Prospects of Bitcoin Technology

Bitcoin, as the first blockchain system, has always attracted attention for its technological development. This article will outline the technological advancements of Bitcoin in recent years, analyze the current application status, and explore potential future development directions.

1. Major Technical Advances in Bitcoin

1.1 Segregated Witness (

Segregated Witness was activated in 2017 through a soft fork, separating signature data from transaction data, achieving the following improvements:

• Solved the transaction scalability issue
• Effectively increased the block capacity to about 4MB
• Lay the foundation for second-layer solutions such as the Lightning Network

) 1.2 Taproot upgrade

The Taproot upgrade came into effect in November 2021, mainly consisting of three BIPs:

• BIP340: Introduction of Schnorr signatures
• BIP341: Implementation of Taproot spending rules
• BIP342: Introduction of Tapscript script verification

Taproot further expands Bitcoin's smart contract capabilities while enhancing privacy and scalability.

1.3 Ordinals Protocol

The Ordinals protocol leverages the scalability of the Taproot upgrade to implement NFT functionality on the Bitcoin network:

• Assign a unique serial number to each Satoshi
• Attach data to Bitcoin through inscriptions.
• Deriving token standards such as BRC-20

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2. Current Main Applications

) 2.1 NFT and Digital Art

Using the Ordinals protocol, a large number of NFT projects have emerged on the Bitcoin network, such as:

• Rare Smart Collection
• Inscription Artworks
• Domain services, etc.

2.2 Token Issuance

Multiple token standards derived from the Ordinals protocol:

• BRC-20: Homogeneous Token Standard
• BRC-721: Non-Fungible Token Standard
• SRC-20: Token standard based on the Stamps system

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) 2.3 DeFi Exploration

Although there are still relatively few DeFi applications on the Bitcoin network, there have been some preliminary attempts:

• Atomic Swap
• Payment channels on the Lightning Network
• Simple smart contracts based on Taproot

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3. Future Development Direction

) 3.1 Layer 2 Scaling Solutions

With the increasing congestion of the mainnet, Layer 2 scaling solutions will become a focus:

• Lightning Network continues to optimize
• The application of sidechain technology such as Liquid
• Exploration of emerging rollup solutions

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) 3.2 Enhanced smart contract capabilities

Further expand the smart contract capabilities of Bitcoin:

• Improve Tapscript
• Explore a more flexible contract programming model
• Develop a smart contract language compatible with Bitcoin

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) 3.3 Privacy Protection Technology

Enhance privacy protection while maintaining network security:

• The application of mixing technologies such as CoinJoin
• Introduction of zero-knowledge proof technology
• Development of privacy-enhanced sidechains

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) 3.4 Cross-chain Interoperability

Promote the interoperability of Bitcoin with other blockchains:

• Atomic Cross-Chain Swap Protocol
• Cross-Chain Asset Bridging
• Multi-chain smart contract

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Conclusion

Bitcoin, as a pioneer in the blockchain field, has a significant impact on the development of technology across the entire industry. In the future, the Bitcoin ecosystem will continue to explore new application scenarios and technological innovations while maintaining its core value proposition, laying the foundation for the arrival of the Web3 era.

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