Many new blockchain projects that come along claim that they can upgrade upon the Bitcoin blockchain and make a cheaper and faster blockchain network with more use cases. But does this happen because Bitcoin can not be upgraded? Well no. Bitcoin can be upgraded but these upgrades come very slowly.
In this blog, we take a look at how Bitcoin can be upgraded, when and why this happens, and take a look at the approach Bitcoin takes to a new decentralized web3 world. And also see how Bitcoin finds its place in the crypto industry as a whole.
So let’s start with Bitcoin’s last upgrade Taproot.
Taproot Bitcoin’s latest upgrade
To not make this blog too technical, the last Bitcoin upgrade called Taproot introduced a new mechanism that made it possible for Bitcoin to send some cheaper and slightly more private transactions. While also creating more options for the creation of smart contracts on the Bitcoin blockchain.
See here for more details about the Taproot upgrade.
Taproot has made Bitcoin again a bit more usable without having to increase the Bitcoin blockchain size. This upgrade was the first again after 4 years without any upgrades. The process of the upgrade going much smoother than last time. As the SegWit upgrade before resulted in a civil war, which once again resulted in many different types of cryptos with the Bitcoin name.
Bitcoin’s next upgrade
What will be the next Bitcoin upgrade and when it will come is still unknown. And the next upgrade proposal can be submitted by anyone. These submissions we call BIPs or Bitcoin Improvement Proposals. Anyone can propose a BIP but only those that are work and preferred by the community will be implemented. One of the current BIPs that is being discussed is the BIP-119.
However, if the whole Bitcoin community and the majority of the network participants do not agree on the implementation. It will not happen. These participants include the Bitcoin miners and node operators. Which are quite a lot, especially with the node count growing very fast to build out a large lightning network on top of Bitcoin. More on that later.
So if you have some programming skills and good ideas, you could try to come up with a way to upgrade Bitcoin. And submit this as a BIP to the Bitcoin Github. Maybe your idea will become the next BTC upgrade.
Why does Bitcoin upgrade so slow
It took a good 4 years for Bitcoin to receive the next upgrade which was Taproot. This process for upgrading Bitcoin goes super slow. But why is that? As some blockchains upgrade their network much faster.
Well, this is because of the approach that the BTC community/teams take. They prefer to upgrade the network slowly with features they know will be 100% secure and without mistakes. This way they can keep the Bitcoin main chain as its secure network, which functions slowly but steadily. Although some ways to scale a blockchain and add more functionality do exist already. It is hard to confirm with 100% certainty that these things will work out over the long run and not compromises the decentralization of the network. That is why Bitcoin moves forward at a slow pace. And why instead focuses on being a reliable source of trust.
Can Bitcoin compete with newer faster blockchains?
New blockchains do come with a lot of extra features like complicated smart contracts, on-chain file storage, faster transactions, and confirmations. But they do not hold the same level of security and trust that Bitcoin has acquired over the years. This makes it so that Bitcoin does not really compete with these other blockchains as they aim for a different type of product (most of the time).
But all these new upgrades do lure a lot of the crypto crowd to newer blockchain networks as they offer fun and interesting new things like blockchain gaming, NFTs, DeFi, and much more.
Although the main Bitcoin blockchain does not really focus on any of those products within the crypto sector. Its sidechains do offer the possibilities that can bring these same types of features to the Bitcoin ecosystem.
Smart contracts on Bitcoin
This brings us to smart contracts on top of Bitcoin. Although not super complicated once like on Ethereum. Bitcoin does offer the option to create smart contracts on top of its blockchain network. These smart contracts are limited out of security reasons of the network. But still, help create some of the network’s transaction features and side-chain networks.
The smart contracts on Bitcoins help create smart contract sidechains for Bitcoin-like Stacks, DefiChain, and RSK. On these networks, Bitcoin DeFi is possible and creates a vibrant ecosystem that gives extra utility to the BTC token. Either in the form of a gas token on the layer 2 networks or as a form of collateral in DeFi protocols.
Although Bitcoin smart contracts mostly occur on the second layer level. The main Bitcoin blockchain could receive some smart contract updates in the future if the whole BTC community and the network providers feel more comfortable that it would not mess up the blockchain. Till then we will have to use these features on the second layer level or on a multi-chain level by using other smart-contract capable blockchains.
Bitcoin on the second layer
On the second layer level, Bitcoin does not over only smart contracts and tokens. But also cheaper, faster, and more efficient transactions. With sidechains like the lightning network being able to process payments so fast and cheap that it can be called the fastest and best payment network in the world. Because of this reason many people have started to use the lightning network for sending cheap and fast transactions or streaming payments over the internet. Even some countries have adopted it as a payment rail, with El Salvador being the first of them all.
These fast and cheap transactions work also perfectly for micropayments and see more and more adoption in the gaming space where the Zebedee wallet is taking the lead as the hub for BTC gaming. Where players can not only have fun but also secure a little bit of the most valuable digital currency out there.
In theory Bitcoin layer 2’s could solve all of its problems and add all of the features that other new layer 1’s also have. The real question is however who will be first to market and gain the most adoption. Or maybe it will all come together and more than one winner will come out in a larger multi-chain ecosystem. Only time will tell.
Final word
We hope this blog taught you a bit more about how Bitcoin can be upgraded and how the Bitcoin developers try to do so at the moment. If you still have any crypto-related questions for us feel free to ask them on our socials. So we can help you find the answers in our next article.
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