TLDR
Bitcoin faces significant limitations in scalability, impeding its potential to serve as a universal financial system. In parallel, Ethereum's rapid growth has demonstrated the necessity of Layer 2 solutions to maintain scalability. Starknet, an L2 scaling solution using STARK technology, proposes the simultaneous scaling of both Bitcoin and Ethereum, unlocking mass adoption for both networks. This Part Two expands on the vision outlined in the original article, exploring Starknet's multi-chain settlement design and its potential to form the foundation of a scalable and efficient cross-chain financial system.
@Bitcoin and @Ethereum represent two divergent paths: Bitcoin serves as the immutable store of value, while Ethereum seeks to be the computational infrastructure powering decentralized applications. However, the limitations in Bitcoin's scalability - capable of processing only about seven transactions per second - have raised concerns about its long-term viability as a global financial system, whilst Ethereum, despite its more flexible infrastructure, faces its own scalability challenges.
Starknet, through its Zero-Knowledge STARK technology, has already demonstrated its effectiveness in scaling Ethereum. With the anticipated introduction of OP_CAT to Bitcoin, Starknet’s capabilities could extend to Bitcoin as well, leveraging the same L2 framework to simultaneously settle transactions on both Bitcoin and Ethereum.
OP_CAT enables the concatenation of two values followed by hashing them within Bitcoin Script, thereby allowing the creation and verification of Merkle trees - a critical element of STARK technology. Once OP_CAT is integrated into Bitcoin, STARK proofs can be efficiently verified, thus enabling trustless rollups to dramatically increase Bitcoin’s throughput.
By utilizing Starknet’s infrastructure, Bitcoin can potentially scale to thousands of transactions per second, enabling everyday micro-transactions as well as large financial transfers, which aligns with Satoshi Nakamoto’s original mission for Bitcoin: a global, decentralized financial system serving billions of people worldwide - including the 1.5 billion who currently lack access to traditional banking services - far beyond the relatively small user base it serves today.
Starknet’s vision goes beyond scaling Bitcoin alone, rather suggesting that it can become a unified L2 settlement layer for both Bitcoin and Ethereum. It aims to enable cross-chain interactions that allow dApps to function seamlessly on both networks, thus benefiting from the security and liquidity of Bitcoin and the programmability of Ethereum.
Today, developers and users must choose between Bitcoin as a store of value and Ethereum as a platform for executing complex financial contracts. A Starknet L2 on both chains would offer users the best of both worlds, with Bitcoin serving as digital gold and Ethereum as the global computational layer. Without compromising the sovereignty and independence of each chain, Starknet would provide a scalable infrastructure capable of supporting cross-chain applications.
As the blockchain space evolves, such collaborative, multi-chain solutions may be key to achieving the level of scalability and global adoption that early pioneers of the technology envisioned. Starknet’s vision serves as a bold step toward realizing a decentralized financial system capable of serving billions, breaking down barriers between chains, and enabling seamless, mass-scale use cases across the world.
