The meteoric rise of Bitcoin over the past ten years has left many observers wondering why it continues to be so successful despite its age and lack of Turing complete smart contracts. As the digital gold standard remains unique place in the world of digital finance. But does it really have what it takes to stay at the top of the crypto heap as many critics claim it cannot compete on the technology layer?
As cryptocurrency continues to gain traction and break into mainstream use, many are criticising Bitcoin for being too outdated and not having the capabilities of its newer competitors. But the truth is that Bitcoin has gotten a bad rep despite its long-standing history and groundbreaking technology.
Despite the labels of being “boomer coin”, Bitcoin is still better than its alternatives, in several aspects such as monetary security, execution security, and a proven track record. Being labelled “old” technology doesn’t mean bitcoin is automatically worse, only that bitcoin takes a different approach to innovation versus the Silcon Valley move fast and break things style of disruption.
Bitcoin might not have Turing complete smart contracts, it can still keep up with the times by taking a more measured approach with the help of sciptless scripts.
Bitcoin and smart contracts.
Bitcoin’s capacity is limited in the amount of block space it has and OP_CODES that are available for the execution of commands. Meanwhile, smart contracts can be resource intensive in terms of data and computation. So even though Bitcoin has always supported basic smart contract functionality, the two have never been a natural match.
To execute the logic needed to run a smart contract, you require a script, which is defined as “an automated series of instructions carried out in a specific order.” Bitcoin has a scripting language based on an old programming language called Forth, while Ethereum has Solidity, which compiles to Ethereum Virtual Machine (EVM) code.
How do smart contract chains work?
A “smart contract” is simply a program that runs on the Smart contract blockchain. It’s a collection of code (its functions) and data (its state) that resides at a specific address on that blockchain. Smart contracts are a type of account that lives on the blockchain and has its own resource requirements to compile and run scripts.
Taking Ethereum as an example, an account is an entity with an ether (ETH) balance that can send transactions on Ethereum. Accounts can be user-controlled or deployed as smart contracts. This means they have a balance and can be the target of transactions.
A smart contract is not run by one user but is deployed to the network and run as programmed. User accounts can then interact with a smart contract by submitting transactions that execute a function defined on the smart contract.
Smart contracts can define rules, like a regular contract, and automatically enforce them via the code. Smart contracts cannot be deleted by default, and interactions with them are irreversible. When a user engages with the smart contract, it is required to use blockchain space and resources to run the script and then pay for the computation needed and block space needed, which can become very costly and honourous on the network as the smart contract requires the execution to be conducted on-chain.
What are scriptless scripts?
Scriptless Scripts are a different approach to the market need for smart contracts and can be used to execute scripts off-chain through the use of Schnorr signatures. The idea is that by aggregating signatures, we can input conditions to the spending of the coins.
The concept of Scriptless Scripts was born from Mimblewimble, which is a blockchain design that does not store permanent data – with the exception of kernels and their signatures. Scriptless Scripts could increase the range and complexity of smart contracts available on bitcoin.
Scriptless scripts come in various forms, namely:
- Simultaneous Scriptless Scripts
- Adaptor Signatures
- Zero Knowledge Contingent Payments
Benefits of scriptless scripts.
Scriptless Scripts bring to the bitcoin network additional functionality, privacy and efficiency.
Functionality
Scriptless Scripts are said to increase the range and complexity of smart contracts. Currently, as within Bitcoin Script, and Bitcoin miniscripts, there are limitations stemming from the number of OP_CODES that have been enabled by the network. Adding any additional OP_CODES or reworking OP_CODES requires a soft fork which makes them harder to pull off.
Scriptless Scripts move the specification and execution of smart contracts from the network to a discussion that only involves the participants of the smart contract instead of having to involve the entire network to secure and run the contract.
Privacy
Instead of running smart contracts on-chain and moving, the specification and execution of smart contracts off-chain increase privacy. When on-chain, many details of the smart contract are shared with the entire network. These details include the number and addresses of participants and the amounts transferred.
By moving smart contracts off-chain, the network only knows that the participants agree that the terms of their contract have been satisfied and that the transaction in question is valid and meets the consensus rules of the bitcoin network.
As far as the bitcoin network is concerned, all it sees is a transaction broadcast to the network along with any other, how the transaction was derivated, and conditions for the transaction are kept off-chain between the participants.
Efficiency
Scriptless Scripts move smart contracts off-chain, minimising the amount of data that requires verification and storage on-chain. By having a smaller on-chain footprint, it requires less from the bitcoin network to execute, resulting in fewer resources in block space and witness data for full nodes to handle and also resulting in lower transaction fees for users.
This means complex smart contracts can be executed without having to drive up the cost and penalise users based on the complexity of the contract as we see on Turing complete smart contract chains.
Work smarter, not harder.
As Bitcoin scriptless scripts gain momentum, the possibilities for more complex functions and smart contracts are endless. Bitcoin’s widespread adoption and its ability to act as a highly liquid and trusted asset make scriptless scripts the perfect solution for developers to implement their ideas quickly and cheaply.
With the increased demand for DeFi protocols, scriptless scripts are a major step forward to make these projects a reality. The potential is exciting, and by continuing to research and develop this technology, we can ensure its success and continue to build true DeFi solutions that make the world of finance more efficient and accessible.
Let us leave the door open for further discussion by continuing to explore the possibilities of Bitcoin scriptless scripts and creating a space of collaboration where developers can develop amazing solutions. In the words of Andreas Antonopoulos, “We are only at the beginning of a journey that will transform money and unlock the potential of open financial technology for the benefit of everyone.”
Do your own research.
If you want to learn more about scriptless scripts on bitcoin, use this article as a jumping-off point and don’t trust what we say as the final say. Take the time to research other sources, and you can start by checking out the resources below.
