Three conditions that Bitcoin L2 must meet

Author: Bitcoin Magazine; Compiler: Deng Tong, Golden Finance

Bitcoin seems to be seriously undervalued.

With the release of the Ordinals Protocol and BitVM whitepaper in 2023, the concept of what is possible in Bitcoin’s base layer is shifting, and it is clear that Bitcoin is now absorbing other areas of the broader cryptocurrency ecosystem. Blockchain needs.

Of course, developers have been eager to add more features to Bitcoin since the beginning of the protocol's 15-year history. From early sidechains like Liquid and Rootstock to future L2.

However, a new wave of imitators are trying to exploit these developments to promote arbitrary crypto tokens. Amid the Bitcoin L2 gold rush, the Bitcoin Magazine editorial board felt the need to clarify its stance on L2 coverage.

Bitcoin L2 must:

• Use Bitcoin as its native asset:L2 is fundamentally designed to have to use Bitcoin as its primary token or unit of account, as well as the mechanism for paying fees for the system. If it has a token, it must be backed by Bitcoin.

• Using Bitcoin as a settlement mechanism to execute transactions: Users of L2 must be able to exit the system through a mechanism (trusted or untrusted), Thus returning control of its funds to L1.

• Show functional dependence on Bitcoin: In order to determine whether a system is Layer 2 of Bitcoin, we can look at whether it is dependent on Bitcoin There are functional dependencies. Specifically, if Bitcoin were to undergo a complete collapse and the system was still operational, then we do not consider the system to be Layer 2 of Bitcoin.

Protocols built on Bitcoin that do not fall into the Layer 2 category include:

• Meta-protocols: Systems like Counterparty (XCP) or Ordinals are protocols outside the scope of the Bitcoin protocol and work at Bitcoin Layer 1 exists and runs on the blockchain, but does not have its own independent blockchain.  

• "Parasite" layer:These systems rely on Bitcoin to exist and cannot operate independently without Bitcoin, but they do not meet the requirements of being considered Other standards required for Layer 2.