Bitcoin's Modular Evolution: Enhancing the Original Blockchain

As we know, in a blockchain, transactions are compiled into blocks, which are then put together by nodes. This block production involves forming a block of transactions, computing them, and adding the block to the network.

Block validation requires other nodes to download and recompute the data to ensure the transactions are valid. The challenge to keep a blockchain decentralized, secure, and scalable simultaneously is significant. 

Typically referred to as the blockchain trilemma, it refers to the challenge of achieving this. Builders need to sacrifice one of these qualities to prioritize the others. This is where we came from and why new solutions have been found and are being connected…

Different Layers and the Way They Are Built

Back to blockchain basics, we see that it is organized in a way that enables it to perform transactions. We see that there are 4 different layers that are built on top of each other. Namely:

⚡ Execution: Where computation happens, and state transitions are executed.
⚡ Consensus: Validators agree on the current state and ordering of transactions.
⚡ Data Availability: Ensures data is available for anyone to download and verify.
⚡ Settlement: The final source of truth when bridging assets between chains.

Data availability is crucial for blockchain security because nodes cannot validate a block without access to all transaction data. If a block proposer suggests including data that is not available to all nodes, the block cannot be properly validated. There are some differences in how this is done. Therefore, based on the way it is done, we can categorize two different architectures that blockchains have created. These are:

• Layer-one (monolithic) blockchains that process and validate transactions on a single layer, leading to costly usage and low throughput. All known already.
• Layer-two solutions, such as rollups, that take block production and validation one level up.

Bitcoin Rollups: The Ultimate Guide to Layer 2 Scalability Solutions

Discover how rollups offer yet another way to tackle Bitcoin’s scalability issues. Explore various rollup projects and learn about the challenges they face in this comprehensive guide. See how Bitfinity positions itself among these solutions and why it presents a better proposition.

Bitfinity BlogFred

What is a monolithic blockchain?

If we take a closer look, we see that a monolithic blockchain handles consensus, data availability, and transaction execution ALL on the same chain. This optimizes for certain objectives but often faces tradeoffs between decentralization, security, and scalability, which has been THE problem in blockchain functioning and is termed the blockchain trilemma.

Three’s Company, Four’s a Crowd: Bitfinity Giving Blockchains a Helping Hand in Solving the Blockchain Trilemma

This article explores the blockchain trilemma, which refers to the difficulty of achieving optimal scalability, security and decentralization within blockchain networks. It examines how solutions like Bitfinity are working to resolve this challenge and enable wider blockchain adoption.

Bitfinity BlogHans

Bitcoin is a prime example of a monolithic blockchain. As a foundational layer, it is the most secure and 'trusted' but is often generic, inflexible, and hard to customize. That being said, a lot of experimentation has been done, but we'll get back to this in a while.

Some Benefits of Monolithic Structures:

• Focus on decentralization and security, which is crucial for monetary networks
• Low barrier to entry for nodes by keeping block size small

But A monolithic blockchain also has some drawbacks:

• Blockchain trilemma - can only achieve 2 of 3 between scalability, decentralization, and security
• Not economically sustainable due to high fees from limited block space
• Difficult to scale without compromising decentralization

Along Came Modularity in Blockchain

Initially, with Bitcoin, a new type of stack was created which enabled decentralized, peer-to-peer applications but had limitations, primarily its focus on monetary transactions only.

Then came Ethereum, which introduced a more advanced platform that supported decentralized applications with Turing-complete logic. A true innovation that led to the development of decentralized finance, rollups, and other blockchain functionalities that we all use and love.

When Did DeFi Begin? A Timeline of Decentralized Finance

Dive into the evolution of Decentralized Finance (DeFi), from its pioneering days on the Ethereum platform to the advanced applications shaping today’s financial blockchain landscape.

Bitfinity BlogHans

This opened up the door to the concept of modularity, where the term 'modularity' discusses the separation of various components of the blockchain stack, particularly separating consensus mechanisms from execution logic.

A separation that wasn't done overnight but evolved through multiple iterations and innovations across the blockchain landscape.

From Genesis to The Merge: Decoding Ethereum’s Journey

Back in the day, Bitcoin was the first to introduce a decentralized digital currency to the world. However, it was then designed primarily for peer-to-peer transactions and lacked the flexibility to support more complex applications. A solution was found - a new network that brought a new wave of decentralized

Bitfinity BlogHans

With the coming of modular blockchains, we saw an evolution of blockchain architecture that offers customization, specialization, and, more importantly, greater scalability.

One of the significant breakthroughs in blockchain modularity came with the concept of separating consensus from execution.

Is Ethereum an example of a modular blockchain?

Ethereum is transitioning to become a modular blockchain. After moving to proof-of-stake, it will introduce sharding to expand data availability. Rollups will leverage this data to execute transactions. As more shards and rollups are added, Ethereum's throughput will scale dramatically while staying decentralized and secure.

Layer 2 Scaling: The Key to Blockchain Adoption

This article discusses the importance of layer 2 scaling solutions for Ethereum’s growth, explaining how rollups and other approaches can provide scalability while maintaining the network’s security. It highlights the need to understand the different layer 2 options available…

Bitfinity BlogHans

What is the Next Step in the Blockchain Structures?

With the natural evolution of the concept of modularity and the necessity to create a more scalable blockchain structure, we have to look at how similar structures can be applied to Bitcoin and its growing DeFi ecosystem.

Exploring the Bitcoin Ecosystem: A Comprehensive Overview

Bitcoin is no longer just digital gold. With layer 2 scaling, DeFi, NFTs, decentralized domains, and more, the Bitcoin ecosystem is expanding. Learn how Bitcoin is evolving…

Bitfinity BlogHans

With many problems that arise from other solutions, such as the "Noisy Neighbor" problem, where the activity of one application can disproportionately affect the performance of others on the same network, new solutions are needed, and Bitfinity didn't sleep on it.

What Is Chain Fusion Technology and How Does It Transform Blockchain Tech?

This article explores how Chain Fusion works through decentralized signing and verification, the capabilities it unlocks, integrations so far, and the future of universal multichain interactions. We also examine Bitfinity’s EVM sidechain that brings advanced smart contracts to Bitcoin.

Bitfinity BlogHans

A Greater Interoperability for Bitcoin via the Bitfinity EVM

As we saw, all experimentations of Ethereum led us in the direction we are going. With the blockchain landscape that evolved into a network of specialized layer twos and ecosystems, we also see increasing fragmentation.

What is more important is the interoperability between them all. What if we could combine all the know-how of Ethereum and give it back to one of the biggest contributors of blockchain, where it is possible to communicate, share, and transfer value from and to, all done on the unparalleled security of the Bitcoin base layer?

Achieving interoperability poses several technical and conceptual challenges. Maintaining security and trust across different blockchain modules with varying governance models, consensus mechanisms, and data structures is a significant hurdle. This is where Bitfinity has a solution for bridging these two worlds via the Bitfinity EVM.

The Interoperability of Ethereum and the Bitfinity EVM: Connecting Different Blockchains

When the Bitfinity EVM comes online, the IC will be cross-functional not only with the Ethereum blockchain but with all of the EVM-compatible chains that are out there in the cryptocurrency space.

Bitfinity BlogDaniel M

Conclusion

The evolution of blockchain technology has been a fascinating journey, from the early days of monolithic structures to the emergence of modular architectures. As the demand for scalability and interoperability grows, solutions like Bitfinity's EVM are paving the way for a more connected and efficient blockchain ecosystem.

Bringing new experimentations back to the roots and helping to bridge the gap between Bitcoin and Ethereum, Bitfinity's EVM is a testament to the power of innovation and collaboration in the blockchain space. By splitting up responsibilities across layers, we can increase throughput by orders of magnitude without compromising on the most decentralized or secure network of them all.

This not only opens up new possibilities for Bitcoin's growing DeFi ecosystem but also sets the stage for greater collaboration and innovation across different blockchain networks.

Connect with Bitfinity Network

Bitfinity Wallet | Bitfinity Network | Twitter | Telegram | Discord | Github

*Important Disclaimer: The information provided on this website is for general informational purposes only and should not be considered financial or investment advice. While we strive for accuracy, Bitfinity makes no representations or warranties regarding the completeness, accuracy, or reliability of the content and is not responsible for any errors or omissions, or for any outcomes resulting from the use of this information. The content may include opinions and forward-looking statements that involve risks and uncertainties, and any reliance on this information is at your own risk.

External links are provided for convenience, and we recommend verifying information before taking any action. Bitfinity is not liable for any direct or indirect losses or damages arising from the use of this information.