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Blockchain General

Bitcoin Layer 2

Scaling and programmability solutions built on top of Bitcoin's base layer that extend its functionality while inheriting some degree of Bitcoin's security. Major approaches include the Lightning Network (payment channels), Stacks (smart contracts via Proof of Transfer), Liquid Network (Blockstream's federated sidechain), and ZK-rollups like Citrea (using BitVM for settlement). These solutions address Bitcoin's limited throughput (~7 TPS) and restricted scripting.

IDbitcoin-layer-2AliasBitcoin L2
Plain meaning

Plain meaning

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Scaling and programmability solutions built on top of Bitcoin's base layer that extend its functionality while inheriting some degree of Bitcoin's security. Major approaches include the Lightning Network (payment channels), Stacks (smart contracts via Proof of Transfer), Liquid Network (Blockstream's federated sidechain), and ZK-rollups like Citrea (using BitVM for settlement). These solutions address Bitcoin's limited throughput (~7 TPS) and restricted scripting.

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Technical context

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Shared crypto concepts that frame the broader ecosystem.

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Bitcoin Layer 2 (bitcoin-layer-2)
Category: Blockchain General
Definition: Scaling and programmability solutions built on top of Bitcoin's base layer that extend its functionality while inheriting some degree of Bitcoin's security. Major approaches include the Lightning Network (payment channels), Stacks (smart contracts via Proof of Transfer), Liquid Network (Blockstream's federated sidechain), and ZK-rollups like Citrea (using BitVM for settlement). These solutions address Bitcoin's limited throughput (~7 TPS) and restricted scripting.
Aliases: Bitcoin L2
Related: Bitcoin, Lightning Network, BitVM, Layer 2 (L2)
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Concept graph

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Branch

Bitcoin

The first decentralized cryptocurrency network, launched in 2009 by the pseudonymous Satoshi Nakamoto, using a Proof-of-Work consensus mechanism and a UTXO-based transaction model. Bitcoin's protocol enforces a fixed supply cap of 21 million BTC, with new coins issued through mining block rewards that halve approximately every four years. It serves as both a peer-to-peer electronic cash system and a store of value, with its scripting language enabling basic programmability such as multisig and timelocks.

Proof of Work (PoW)UTXO Model
Open term
Branch

Lightning Network

A Layer 2 payment channel network built on Bitcoin that enables near-instant, low-cost transactions by conducting most activity off-chain. Two parties open a channel by locking BTC in a multisig transaction, then exchange signed commitment transactions off-chain; only the opening and closing transactions are broadcast on-chain. Payments can be routed across multiple channels using Hash Time-Locked Contracts (HTLCs), enabling trustless multi-hop transfers.

SegWit (Segregated Witness)
Open term
Branch

BitVM

A computing paradigm proposed by Robin Linus in October 2023 that enables verification of arbitrary computations on Bitcoin without consensus rule changes, using an optimistic model similar to optimistic rollups. A prover claims a computation result, and any verifier can execute a fraud proof on-chain to penalize false claims. BitVM2 (2024) reduced dispute resolution to three on-chain transactions and enabled permissionless verification.

Rollup
Open term
Branch

Layer 2 (L2)

A scaling solution built on top of a Layer 1 blockchain that processes transactions off-chain while inheriting the security of the base layer. L2 types include optimistic rollups (Arbitrum, Optimism), ZK rollups (zkSync, StarkNet), state channels, and sidechains. L2s post transaction data or proofs back to L1 for finality.

Layer 1 (L1)
Open term
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Blockchain General

Bitcoin

The first decentralized cryptocurrency network, launched in 2009 by the pseudonymous Satoshi Nakamoto, using a Proof-of-Work consensus mechanism and a UTXO-based transaction model. Bitcoin's protocol enforces a fixed supply cap of 21 million BTC, with new coins issued through mining block rewards that halve approximately every four years. It serves as both a peer-to-peer electronic cash system and a store of value, with its scripting language enabling basic programmability such as multisig and timelocks.

Open term
Blockchain General

Lightning Network

A Layer 2 payment channel network built on Bitcoin that enables near-instant, low-cost transactions by conducting most activity off-chain. Two parties open a channel by locking BTC in a multisig transaction, then exchange signed commitment transactions off-chain; only the opening and closing transactions are broadcast on-chain. Payments can be routed across multiple channels using Hash Time-Locked Contracts (HTLCs), enabling trustless multi-hop transfers.

Open term
Blockchain General

BitVM

A computing paradigm proposed by Robin Linus in October 2023 that enables verification of arbitrary computations on Bitcoin without consensus rule changes, using an optimistic model similar to optimistic rollups. A prover claims a computation result, and any verifier can execute a fraud proof on-chain to penalize false claims. BitVM2 (2024) reduced dispute resolution to three on-chain transactions and enabled permissionless verification.

Open term
Blockchain General

Layer 2 (L2)

A scaling solution built on top of a Layer 1 blockchain that processes transactions off-chain while inheriting the security of the base layer. L2 types include optimistic rollups (Arbitrum, Optimism), ZK rollups (zkSync, StarkNet), state channels, and sidechains. L2s post transaction data or proofs back to L1 for finality.

Open term
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Blockchain Generalbitcoin

Bitcoin

The first decentralized cryptocurrency network, launched in 2009 by the pseudonymous Satoshi Nakamoto, using a Proof-of-Work consensus mechanism and a UTXO-based transaction model. Bitcoin's protocol enforces a fixed supply cap of 21 million BTC, with new coins issued through mining block rewards that halve approximately every four years. It serves as both a peer-to-peer electronic cash system and a store of value, with its scripting language enabling basic programmability such as multisig and timelocks.

AliasBTC
Open term
Blockchain Generalbitcoin-halving

Bitcoin Halving

A programmatic event occurring every 210,000 blocks (~4 years) that reduces the Bitcoin block reward by 50%, enforcing a disinflationary monetary policy converging on the 21 million BTC supply cap. The most recent halving occurred on April 20, 2024 (block 840,000), reducing the reward from 6.25 to 3.125 BTC per block. Halvings shift miner revenue composition toward transaction fees and have historically correlated with bull market cycles.

AliasHalvening
Open term
Blockchain Generalbitcoin-ordinals

Bitcoin Ordinals

A protocol created by Casey Rodarmor in January 2023 that assigns a unique serial number (ordinal) to each individual satoshi based on mining order, enabling satoshis to carry arbitrary data (inscriptions) stored in Taproot witness data. Inscriptions can contain images, text, HTML, or other media up to the ~4 MB block weight limit, creating non-fungible digital artifacts natively on Bitcoin. Over 63 million inscriptions were created by early 2024.

AliasOrdinalsAliasInscriptions
Open term
Related terms

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Blockchain Generalbitcoin

Bitcoin

The first decentralized cryptocurrency network, launched in 2009 by the pseudonymous Satoshi Nakamoto, using a Proof-of-Work consensus mechanism and a UTXO-based transaction model. Bitcoin's protocol enforces a fixed supply cap of 21 million BTC, with new coins issued through mining block rewards that halve approximately every four years. It serves as both a peer-to-peer electronic cash system and a store of value, with its scripting language enabling basic programmability such as multisig and timelocks.

Open term
Blockchain Generallightning-network

Lightning Network

A Layer 2 payment channel network built on Bitcoin that enables near-instant, low-cost transactions by conducting most activity off-chain. Two parties open a channel by locking BTC in a multisig transaction, then exchange signed commitment transactions off-chain; only the opening and closing transactions are broadcast on-chain. Payments can be routed across multiple channels using Hash Time-Locked Contracts (HTLCs), enabling trustless multi-hop transfers.

Open term
Blockchain Generalbitvm

BitVM

A computing paradigm proposed by Robin Linus in October 2023 that enables verification of arbitrary computations on Bitcoin without consensus rule changes, using an optimistic model similar to optimistic rollups. A prover claims a computation result, and any verifier can execute a fraud proof on-chain to penalize false claims. BitVM2 (2024) reduced dispute resolution to three on-chain transactions and enabled permissionless verification.

Open term
Blockchain Generallayer-2

Layer 2 (L2)

A scaling solution built on top of a Layer 1 blockchain that processes transactions off-chain while inheriting the security of the base layer. L2 types include optimistic rollups (Arbitrum, Optimism), ZK rollups (zkSync, StarkNet), state channels, and sidechains. L2s post transaction data or proofs back to L1 for finality.

Open term
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Blockchain General

Blockchain

A distributed, append-only ledger that records transactions in cryptographically linked blocks. Each block contains a hash of the previous block, forming an immutable chain. Nodes in the network maintain copies of the ledger and reach agreement through consensus mechanisms. Blockchains enable trustless, decentralized record-keeping without a central authority.

Open term
Blockchain General

Consensus Mechanism

The protocol by which nodes in a distributed network agree on the current state of the ledger. Common mechanisms include Proof of Work (Bitcoin), Proof of Stake (Ethereum, Solana), and BFT variants. Consensus ensures all honest nodes converge on the same transaction history despite potential network delays or malicious actors.

Open term
Blockchain General

Proof of Stake (PoS)

A consensus mechanism where validators are selected to produce blocks based on the amount of cryptocurrency they have staked (locked) as collateral. PoS is energy-efficient compared to Proof of Work. Misbehaving validators risk losing their stake (slashing). Solana, Ethereum (post-Merge), Cosmos, and Cardano use PoS variants.

Open term
Blockchain General

Proof of Work (PoW)

A consensus mechanism where miners compete to solve computationally expensive puzzles to produce blocks and earn rewards. PoW provides strong security (51% attack resistance) but is energy-intensive. Bitcoin and pre-Merge Ethereum use PoW. The difficulty adjusts to maintain target block times regardless of total network hash power.

Open term