Drivechain May Share Bitcoin’s Blockchain – Crypto
This is opinion editor Nikita Chaschinsky, a software development editor working on BIP300 sidechains.
Today, Bitcoin is facing a challenge. Success requires two conflicting conditions, and if we want to win, we must find a way to satisfy both. First, there is the requirement for security – this is paramount when billions of dollars are at stake. In the world of security, professional paranoia and conservatism are essential. Any changes introduced to the Bitcoin software represent a potential security vulnerability. Ideally, we would freeze Bitcoin’s codebase and never make changes that don’t fix security holes.
This first requirement is already on the way to being satisfied with a creeping ossification, which is not a conscious strategy, but an accidental political reality formed as a result of historical events and technological limitations. Any change that affects consensus must go through a long, extensive and rigorous deliberation process. You can see this with the Taproot soft fork, which took 46 months from January 2018 proposal to November 2021 activation, and the more recent OP_CTV activation discussion. It may be by accident, but we are on our way to fulfilling the first requirement.
However, this unconscious “strategy” comes at a heavy price. In the existing system of accidental ossification, we are exposed to an extreme, perhaps even justified level of risk aversion, because if a decision is made and a risk is taken, then this risk must be borne by all Bitcoin users. Technological developments can either take years to implement or be rejected outright. In such a system, we will never see technological progress.
As it stands, Bitcoin will never see zero-knowledge cryptography or ring signatures. Thus, Bitcoin will never have strong privacy. Only Bitcoin’s competition will have strong privacy.
At scale, we’re stuck with Lightning Network and custody solutions. Lightning is great, but it has limitations in terms of scaling. It has limited capacity to accommodate new users and still has unsolved UX challenges. Also, some proposals that significantly improve Lightning, such as SIGHASH_ANYPREVOUT, either take years to fire or never fire at all.
This is not to mention more experimental ideas and technologies, such as Blockstream’s simplification proposal. It enables better designed smart contracts on Bitcoin than existing smart contracts on altcoins. Given the complexity of the proposal, it is highly unlikely that it will ever see the light of day under the current process. Only Bitcoin’s biggest competitor will have a smart contract.
And that’s not all. Additionally, there are already existing technological developments in data protection, scaling, and smart contracts that Bitcoin will not implement. We voluntarily, or worse, accidentally hand over the power of future technological innovation to our competitors. Our competition is not at all limited by ossification.
Significant developments are already on the table. Imagine how far behind we will be in the development of cryptography and computer technology in a decade or two, if the situation does not change.
To win, Bitcoin needs a mechanism to change and adapt to achieve victory in the competitive environment. It doesn’t matter how great Bitcoin is in its current state. Without such a mechanism, Bitcoin’s potential will remain fixed and its competitors and opponents will grow. In this situation, it doesn’t matter how far ahead you are, and no matter how far behind your competitors and opponents, they will eventually catch up. Failure to adapt in a competitive environment usually does not work.
Unless at some point there is a transition from the tradition and isolation of the Edo period to the open-mindedness and modernization of the Meiji period, the British will show up with helmets, Gatling guns and rifles, and then you’ll be stuck with samurai swords and horses. .
These are our two “irreconcilable” requirements – change and security. The only good way to reconcile them that I’m aware of is to separate Bitcoin into two isolated layers. Layer 1 should be a fully ossified base layer and never make any security-enhancing changes (this would most likely be the existing Bitcoin Core). Layer 2 should be a sidechain layer that is free to take risks and implement arbitrary functions.
There should be a secure two-way pin that allows anyone to transfer money between the base layer and any sidechain in layer 2 at a 1:1 rate. This two-way pinning mechanism and perhaps a blindly merged mining arrangement may be the only thing that connects Layer 1 and Layer 2.
With this mechanism, each user would individually and unilaterally decide how much technological risk to take. Any user can transfer funds to a given sidechain and voluntarily accept its trade-offs and risks, or at any time, deposit them back into the ossified safety of the base layer.
This individual risk-taking or non-taking and trade-offs affecting only the people who participate would replace the existing collective risk-taking process by considering the entire community and introducing all-or-nothing changes that affect everyone. a single Bitcoin user.
There is already a captive implementation of this idea – Liquid Network. But since it’s detention, it’s wrong. In order to attack it, you have to compromise five custodians spread around the world, and not just one, which is much better than something like Coinbase, but it still takes custody.
Liquid’s success is quite limited. On September 14, 2022, according to liquid.net, 3560 BTC will join the network. That’s about $71 million, or 0.019% of the current BTC supply of just over 19 million coins in circulation. It’s better than nothing, but an implementation that relies on 11 out of 15 multisigs managed by 15 functional listed companies worldwide – so only ~$71 million in it.
The same idea proposed in BIP300 and BIP301 – Drivechain – has a non-custodial implementation. It requires a soft fork to activate, but it is distributed and unreliable. Two-way anchoring is provided by paying each sidechain transaction fee to miners to perform fixed and very simple functions. A full description of the mechanism can be found in the BIPs.
This is a significant security improvement over Liquid. To attack Liquid, you only need to compromise five built-in functionaries, which is woefully insufficient security given the type of adversaries Bitcoin could face if it continues to grow. To attack Drivechain, you need to perform a 51% attack lasting three months, while making it painfully obvious to every single participant in the network that you are performing an attack, and giving participants enough time to respond.
With Drivechain, we have a way to reconcile our two “incompatible” requirements of change and security. We can ossify Bitcoin more fully than the existing “accidental political reality” type of ossification, preserve the trustless and distributed nature of Bitcoin, and at the same time ensure that in the future we will be the “Britain” with metaphorical iron caps, Gatling guns and rifles, and our competitors and adversaries would be the ones stuck with metaphorical samurai swords and horses.
This is a guest post by Nikita Chasshinsky. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Crypto.