Why Bitcoin?

Why Bitcoin?

Although SCL is ultimately designed to be abstracted for any particular distributed ledger technology or second-layer solution, Dark Fusion has made the decision to launch SCL as a Bitcoin blockchain product.

We believe Bitcoin represents the most ideal candidate for launch as it is substantially less crowded than other blockchains, reducing noise and competition. Furthermore, we expect Bitcoin to increase its lead in consumer brand recognition as new ETF products make their way onto the U.S. and global financial markets. This familiarity should help drive the adoption of new Web3 products created by developers on the Bitcoin network using SCL and the Dark Fusion suite of products. Bitcoin has also demonstrated a reawakening as a new frontier for developers. Well-executed Bitcoin Improvement Proposals such as Taproot have enabled parties to develop novel inscription techniques to store unique metadata directly into the smallest unit of Bitcoin called the Satoshi. Ordinals does exactly this, and the BRC-20 token standard evolved shortly thereafter, using the Ordinals standard. While we see these improvements as trivial from the perspective of true Smart Contract functionality of the Bitcoin protocol, we note that their rapid uptake and participation by the community provide evidence that the demand is there.

Bitcoin is also supported by an important second-layer solution called the Lightning Network that is, perhaps, one of the best-developed and most mature iterations of the technology in the market. SCL is designed to leverage Bitcoin’s UTxO topology, by using these transactions as single-use cryptographic seals to which SCL transactions can utilise for public settlement and finality. When used in combination with the Lightning Network, off-chain transactions can occur seamlessly and efficiently without congesting the Bitcoin network, while benefiting from the high throughput and processing speed that is endemic to a layer 2 solution like the Lightning Network.

Lightning Network, New Legs for Bitcoin

The Bitcoin network gained a huge evolutionary advantage in 2015 with the advent of the Lightning Network by Lightning Labs. The Lightning Network is a layer 2 solution that allows two parties to open off-chain payment channels between each other. These payment channels can send and receive an unlimited number of transactions with minimal costs. Channels are closed when the two parties agree that a payment or series of payments are complete and the channel is no longer needed. This results in a final state being updated and propagated down to the underlying native blockchain layer, such as Bitcoin. In this way, multiple payments can be performed with just the cost of a single update on the mainnet greatly reducing congestion and cost, while improving transaction times and throughput.

SCL’s implementation on the Lightning Network proves our thesis that smart contract frameworks can be decoupled from an underlying blockchain layer, allowing them to run efficiently at scale, and thereby opening up possibilities for vast future use cases previously infeasible with current smart contract paradigms. Because of the design of the network, transactions occur quickly and inexpensively, as they are no longer processed on the Bitcoin mainnet. These benefits are evident when comparing Lightning Networks specifications against other existing decentralised networks. The use of the Lightning Network by Dark Fusion provides us the ability to bring new frameworks and software tools to the Bitcoin network, vastly improving the potential for future innovation.