Opinion: Bitcoin L2 has a long way to go, and the end goal is ZK Rollup
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Opinion: Bitcoin L2 has a long way to go, and the end goal is ZK Rollup
A true Bitcoin Rollup does not yet exist, but a group of builders is laying the foundation for Bitcoin's future L2.
Navigating Web3 tides with focused insightsAuthor: Arjun Chand
Translation: Luffy, Foresight News
The Bitcoin ecosystem is experiencing explosive growth. New primitives like Ordinals, Runes, and BRC-20 are taking center stage. This marks a shift from being merely an asset into a more dynamic ecosystem where people can build and use different products.
Right now, Layer 2 (L2) solutions are the new hot topic in Bitcoin. Everyone wants a piece of the Bitcoin L2 pie—but what's all the hype really about?
In today’s story, we’ll zoom out to understand the full landscape of Bitcoin L2s. We’ll answer key questions for those unfamiliar with the concept: Why do we need L2s? What’s the current state? What does the future hold? And what might the endgame look like?
Why Bitcoin Needs L2s
Bitcoin was designed with security and decentralization as top priorities, which meant making trade-offs on blockchain scalability. While this makes BTC a more valuable asset, it also means the network isn't ideal infrastructure for building financial applications.
For nearly a decade, the Bitcoin community has struggled with scalability issues—during peak traffic periods, transaction fees have soared to tens of dollars. Today, demand for Bitcoin block space has reached new heights, driven by experiments like Ordinals, Runes, and BRC-20s:
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Ordinals caused Bitcoin fees to increase by 280% from December 2023 to date.
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Runes transactions account for 68% of total Bitcoin transaction volume since Bitcoin’s inception.
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Over the past year, BRC-20 activity has driven Bitcoin transaction fees so high that they once accounted for 74% of the block reward.
Bitcoin’s vision is universal accessibility and adoption. To achieve this, it must scale to handle more traffic without requiring users to spend heavily on every transaction. The growing demand for Bitcoin block space highlights the urgent need for scaling—and reflects a rising demand for Bitcoin L2s.
Current State of Bitcoin L2s
For years, the Bitcoin community has actively worked on improving scalability. One major initiative in this space is the Lightning Network—a payment channel protocol designed to enable faster, cheaper transactions by processing them off the Bitcoin L1.
While the Lightning Network has long been the flagship solution for Bitcoin’s scalability vision, the community increasingly recognizes its limitations. There’s now a growing consensus that Lightning may not be the final answer for Bitcoin scaling, and that better Bitcoin L2 solutions are needed.
@ercwl recently discussed the need for improved L2s on a Bankless episode, suggesting that Bitcoin’s future scalability could extend beyond what Lightning currently offers.
But where does that leave us? How do we build more effective Bitcoin L2s?
BitVM’s Minimized Trust Promise
Currently, much attention is focused on BitVM—a new model for executing Turing-complete contracts on Bitcoin that could pave the way for Optimistic Rollups on Bitcoin.
One reason the community favors BitVM over other approaches is its compatibility with the Taproot upgrade. This means BitVM can be deployed without further modifications to the Bitcoin network, preserving existing rules—an outcome beneficial to everyone in the Bitcoin community.
BitVM works by executing transactions off-chain, while enabling on-chain verification via fraud proofs during a challenge window—a mechanism similar to Optimistic Rollups on Ethereum.
The system can even operate with just one prover, under the trust assumption that at least one honest verifier always exists who can detect and broadcast malicious transactions. However, this also implies a risk: if all verifiers are compromised, Bitcoin’s integrity could be threatened, as attackers could post fraudulent transactions on the network.
Opportunities for Bitcoin L2s
BitVM only enables minimally trusted Bitcoin L2s (like Optimistic Rollups), not trustless ones (like ZK Rollups). Additionally, like Ethereum’s Optimistic Rollups, BitVM faces several challenges, such as long dispute resolution times and the requirement for operators to lock up large amounts of capital to ensure liquidity for potential withdrawals.
As a result, the Bitcoin community remains somewhat skeptical about BitVM’s practicality. That said, it’s important to note that BitVM is still in early development and holds promise for scaling Bitcoin through Optimistic Rollups.
The Zero-Knowledge Dream
This brings us to our core question: What is the endgame for Bitcoin L2s? The answer: ZK Rollups.
However, building ZK Rollups on Bitcoin is far from easy—and currently impossible from a technical standpoint. It would require a soft fork to change the Bitcoin network, and we all know how difficult that can be in practice.
A soft fork would add a new opcode to Bitcoin, allowing it to natively recognize and verify zero-knowledge proofs, thereby enabling trustless interactions between Bitcoin and rollups. Yet, as noted above, this presents a significant technical hurdle, and its feasibility remains uncertain.
But wait—if BitVM is still in its infancy, and neither Optimistic nor ZK Rollups are currently feasible on Bitcoin, then why are there so many Bitcoin L2 projects in our ecosystem today?
The reality is that, technically speaking, true Bitcoin rollups don’t exist yet. What we’re seeing are dedicated teams laying the groundwork for future Bitcoin L2s.
For example, some rollup teams (like BOB) are taking a phased approach. They’re first bootstrapping their ecosystem as EVM rollups, attracting users, liquidity, and applications. Then, once the technology matures, they plan to transition to Optimistic Rollups using BitVM. Ultimately, their goal is to evolve into ZK Rollups—depending on whether Bitcoin undergoes a soft fork to add the necessary opcodes.
Closing Thoughts
More hype means greater potential for scams. Amid the excitement, numerous projects falsely claim to be Bitcoin L2s, so investors and users must remain cautious. It remains unclear whether many of these self-proclaimed L2 projects truly qualify as L2s or are simply riding the trend to attract venture capital and retail investment.
Nevertheless, this is an exciting time for the Bitcoin community. From the launch of spot Bitcoin ETFs—marking a milestone in institutional adoption—to innovations like Ordinals, BRC-20s, and Runes, the Bitcoin ecosystem is undergoing unprecedented growth and innovation. The prospect of L2s makes Bitcoin’s future even more promising.
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