Drivechain could make Bitcoin’s Blockchain obsolete forever.

Is Drivechain going to replace Bitcoin’s blockchain technology?

Bitcoin is struggling. To win, we must meet two contradictory requirements. When billions of dollars are at stake, security is paramount. Paranoia and conservatism are necessary for security. Any Bitcoin software modification introduces a security risk. We should freeze Bitcoin’s codebase and never make modifications that don’t fix bugs.

This first criterion is being met by a creeping ossification, which is not a planned strategy but an incidental political reality caused by historical circumstances and technology restrictions. Every adjustment that affects consensus must be carefully considered. The Taproot soft fork, proposed in January 2018 and activated in November 2021, and the OP CTV debate are examples. We’re fulfilling the first criteria, perhaps by accident.

This unconscious “tactic” is costly. In the current unintentional ossification regime, we are subject to tremendous and possibly reasonable, risk aversion. If a choice is made and risk is taken, every Bitcoin user must bear that risk. Technological advances are either implemented slowly or disregarded. In such a regime, technology won’t advance.

Zero-knowledge cryptography and ring signatures won’t be included in Bitcoin. Bitcoin’s privacy won’t improve. Only Bitcoin’s rivals will be private.

Scaling will require Lightning Network and custodial solutions. Lightning has scaling constraints. It has limited onboarding capacity and UX issues. Some Lightning improvements, like SIGHASH ANYPREVOUT, will take years or never be implemented.

Not to mention experimental ideas and technology like Blockstream’s simplicity proposal. It enables better smart contracts on Bitcoin than on altcoins. Given the proposal’s intricacy, it’s unlikely to pass under the current approach. Bitcoin’s biggest rival will have smart contracts.

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More. Bitcoin won’t implement privacy, scaling, or smart contracts, either. We’ll voluntarily or unwittingly provide our competition with future technological innovation. Our rivals aren’t ossified.

There’s room for improvement. If nothing changes, we’ll be decades behind in cryptography and computer science.

Bitcoin must adapt to its competitive environment to win. Bitcoin’s current situation doesn’t matter. Without a system, Bitcoin’s potential would remain fixed and rivals’ will expand. No matter how far ahead or behind you are, your competitors will catch up. In a competitive environment, not adapting rarely works.

Unless Edo’s tradition and isolation give way to Meiji’s openness and modernization, the British will arrive with ironclads, Gatling guns, and rifles, and you’ll be stuck with samurai swords and horses.

Change and security are “irreconcilable” needs. Only by separating Bitcoin into two layers can they be reconciled. Layer 1 must be ossified, with no non-security-improving changes (in all likelihood that would be the existing Bitcoin Core). Layer 2 must be a risk-taking sidechain that can implement arbitrary functionality.

A secure two-way peg must allow 1:1 fund transfers between the base layer and any Layer 2 sidechain. This two-way peg mechanism and blind merged mining should connect Layers 1 and 2.

Each user would decide individually and unilaterally how much technological risk to take. Any user can move funds into a sidechain and accept its trade-offs and hazards, or move them back to the base layer’s ossified security.

Individual risk-taking and trade-offs would replace the current method of communal risk-taking through community deliberation and all-or-nothing modifications that affect every Bitcoin user.

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The Liquid Network already implements this notion. The custodial is faulty. To attack it, you must compromise five custodians around the world, which is better than Coinbase, but it’s custodial.

Liquid has minimal success. Liquid.net has 3,560 BTC in the network as of September 14, 2022. $71 million is 0.019% of the 19 million BTC in circulation. It’s better than nothing, but relying on an 11-of-15 multisig controlled by 15 functionary-formed firms around the world requires an unacceptable level of trust for an allegedly trustless distributed cryptocurrency, which explains why there’s only $71 million in it.

Drivechain is a non-custodial implementation of BIP300/301’s notion. Distributed and trustless, it requires a soft fork. The two-way peg is secured by paying miners to fulfill a fixed, simple set of functions. BIPs detail the mechanism.

This improves Liquid’s security. Liquid’s security is severely inadequate given the potential threats Bitcoin may face as it grows. To attack Drivechain, you must undertake a 51% attack over three months, while making it clear to every network participant that you’re attacking and giving them time to reply.

Drivechain reconciles our “irreconcilable” change and security requirements. We can ossify Bitcoin more completely than with the current “accidental political reality” kind of ossification, preserve Bitcoin’s trustless and distributed nature, and ensure that, in the future, we are the “British” with metaphorical ironclads, Gatling guns, and rifles, and our competitors and adversaries are stuck with metaphorical samurai swords and horses.

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