Bitcoin Smart Contracts Guide | Trust Machines

Bitcoin layers are unique in that they can introduce new features to the network, without making any modifications to the mainchain. Rather than altering Bitcoin code, innovations and other experimental developments can be introduced without any modifications to the Bitcoin blockchain itself. This way, the core of Bitcoin can always remain simple, and unaffected by what is being built on top.

All Bitcoin layer transactions ultimately settle on the Bitcoin base layer. This means that the history of every transaction will be written into Bitcoin’s ledger, which is agold standard for security, immutability, and durability within blockchain. The degree of verification is what sets the blockchain apart from any other network. To alter a Bitcoin layer transaction, you would need to alter a mainchain transaction – which is nearly impossible.

Overall, Bitcoin smart contracts that execute on layers have a few key advantages.

Greater programmability. Smart contracts on layers overcome the limited capabilities of Bitcoin’s scripting language by accessing its own global state. By having their own fully expressive smart contracts and gas tokens, layers can broaden the possibilities for what can be built on top of Bitcoin.

Higher scalability. Deploying smart contracts on scaling solutions means that transactions can be processed remarkably faster. Currently, the base layer can only handle about 5-7 transactions per second. Bitcoin layers can bundle transactions before they are sent to the mainchain for final settlement. This dramatically increases Bitcoin’s throughput and its viability as a scalable network with millions of daily transactions.

Improved efficiency. Improved scalability goes hand in hand with faster transactions and cheaper costs. Shorter block times make for quicker confirmation, while the cost of transacting on a Bitcoin layer is significantly reduced compared to the mainchain. Moreover, layered transactions reduce clutter that occurs at the base layer and improves the performance of the entire network.