Bitcoin Scaling Issues
Talking about Bitcoin scalability might seem like beating a dead horse at this point. However, this is still a highly concerning issue in the ecosystem, especially considering that Bitcoin will most likely continue to onboard more users and applications as its value and awareness about it grow.
It is important to point out that there are three major areas where work to scale Bitcoin is ongoing.
1. Transaction throughput
This is where much of the focus has been for the last decade, and, indeed, when Bitcoin scalability is mentioned, it is what comes to the mind of many. At its core, the Bitcoin network is a payment service, and as a result, the number of payment transactions it can process in a second is a critical metric.
The network's initial capacity was not more than 8 transactions per second. That is very low, especially considering that centralized payment systems such as Visa process up to tens of thousands of transactions per second.
As Bitcoin's use grew, pressure on the system resulted in transaction confirmation delays and high transaction fees. Over the years, various solutions have been developed and implemented to achieve transaction throughput scalability. The most notable and impactful are the Lightning Network and sidechain protocols.
2. Smart contract capabilities
The second area where Bitcoin has needed to scale is to acquire the ability to host and execute smart contracts. Before the launch of Ethereum in 2015, nobody knew that Bitcoin was disadvantaged in this way, and that is because everyone saw it mostly as a payment solution. Ethereum changed that.
Today, many agree that the Bitcoin network, owing to its strong security, could be ideal for hosting and running different kinds of decentralized applications (dApps), especially decentralized finance applications. It could even be a better blockchain for that use case.
However, this is only possible if the network is given the capacity to execute smart contracts.
A few projects have been launched to give the Bitcoin network smart contract capabilities. RootStock (RSK) and Stacks are at the top of the list.
3. Data Availability
The other two capacities of Bitcoin, high transaction throughput and smart contract capabilities, can only be achieved, especially with high efficiency, if this third area of the Bitcoin network is scaled.
In its primary design, the Bitcoin network can process and store a very limited amount of data. The size of the block of transactions— the easiest metric to measure—that the network can process is about 1MB.
Attempts have been made to increase the block size, but the likelihood of that leading to the centralization of the network has stood in the way.
What has been achieved so far at the base layer of Bitcoin regarding data scaling is cutting down the amount of data from each transaction that goes into the block. This has been done through the Segregated Witness (SegWit) update to allow more transactions in the block.
However, that has not done much to solve the actual problem, especially with the adoption of inscription protocols that generate and require a significant amount of data. Bitcoin's new use cases have continued to put pressure on the network in terms of data processing and storage.
The Nubit solution to data availability on Bitcoin
Nubit is a product of Riema Labs, a startup founded in December 2023 by Yu Feng, a computer science professor at the University of California, Santa Barbara. Other co-founders include Hans Liu and Hongbo Wen.
Nubit as a Data Availability (DA) layer is a solution designed to provide more data capacity on the Bitcoin network without creating the risk of centralization. When implemented in full, it is supposed to give the Bitcoin network the capacity to support applications in DeFi, AI, SocialFi, and GameFi.
In essence, Nubit is a network of independent nodes with its own consensus mechanism. Each node contributes to data storage and processing capacity. As a combined ecosystem, Nubit receives, stores, and makes the data available to applications on the Bitcoin network.
The Nubit Data Availability (DA) layer on the blockchain is supposed to achieve four critical basic goals:
1. Increase the data Throughput of the Bitcoin network by as much as 100X.
2. Remove the need for trust in the data management on the Bitcoin network, therefore avoiding centralization and single points of failure.
3. Reduce the cost of transaction processing on the Bitcoin network, especially regarding data processing.
4. Make data on the Bitcoin network easily accessible to applications and protocols that need it to function.
Competition Analysis
Nubit is among the first-ever decentralized Bitcoin-native data availability layers. Before this, most of the data solutions for the Bitcoin network, and indeed many other public blockchains, have been centralized.
That has created an architecture that is counter to Bitcoin's central tenet, which is avoiding single points of failure, especially those that are used based on the trust of the people behind them.
Celestia is one of the most notable alternative data availability solutions for the Bitcoin network.
A major feature that makes Nubit stand out, especially in comparison to Celestia, is that it uses Bitcoin as its primary token for its consensus protocols. It also uses a Bitcoin-native staking protocol powered by the Babylon protocol.
Celestia and other similar data availability protocols use their own tokens to create a consensus mechanism. Of course, this requires users to trust the viability of a medium of exchange other than Bitcoin.
Nubit has also been designed to accept light nodes as part of its network. These light clients can perform tasks by sampling the available data without downloading entire blocks.
Investment
The team behind Nubit received the first angel investment round in January 2024, a seed round led by Polychain Capital, an American investment firm based in San Francisco, California. The exact amount was never made public.
On March 26, 2024, Nubit announced raising a $3M pre-seed funding round, whose participants included dao5, OKX Ventures, and Primitive Ventures.
On Jun 5, 2024, Nubit announced the close of an $8 million seed funding round led by Polychain Capital, with the list of other participants including Nomad Capital, Big Brain Holdings, Spartan Group, L2IV, GCR, Gate Ventures, Protagonist, Animoca and Mask Network.
As of the time this post was published, Nubit had raised about $12 million in total funding.
Partnerships
Nubit has formed partnerships, most of which are critical to achieving its goals.
The list includes:
BounceBit—This is a project that is building a restaking infrastructure on top of the Bitcoin network.
Yala— This is a programmable layer on top of the Bitcoin network that gives it smart contract capabilities. This, in turn, makes it possible to build and integrate DeFi and other decentralized applications (dApps) on top of Bitcoin.
Merlin Chain—This is a layer on top of the Bitcoin network that introduces and integrates ZK-Rollup and decentralized Oracle networks.
Babylon— This is a security-sharing protocol for the decentralized economy on top of public blockchains, including the Bitcoin network.
Bitlayer— This is a project designed to add Turing completeness on top of the Bitcoin network.
Side Protocol—This is a side chain infrastructure that facilitates value exchange for the growing Bitcoin ecosystem.
BitSmiley—This protocol, through what is known as the Fintegra framework, offers a stablecoin, lending protocol, and derivatives protocol on the Bitcoin network.
Polyhedra —This is a project bringing Zero-Knowledge Proofs (ZKP) and cross-chain interoperability protocols to the Bitcoin network.
Talus Network —This is a protocol designed to interoperate the Bitcoin network and applications using artificial intelligence (AI).
Road map and development
The project was officially launched at the Christmas of 2023. However, its activities became public for the first time in early 2024.
In early February, the dev team unveiled the pre-alpha version of Nubit for external testing.
That was followed by the going live of the Pre-Alpha Testnet on April 3, 2024.
On May 30, 2024, the team announced the integration with Babylon Devnet, which enabled staking on the Nubit network.
On June 8, 2024, the dev team announced the going live of the Nubit Alpha Testnet Incentivized Campaign.
Some of the major milestones in the pipeline include launching the mainnet later in 2024.
Community growth
The project is less than a year old and has gained a significant social media following. It has accumulated over 360,000 followers on X, 165,000 members on Telegram, and over 240,000 members on Discord. Between June 5th and June 26th, the official account of the project on X has doubled its followers.
Based on the amount of capital it has raised and the growth of its community, Nubit seems on track to become one of the largest Bitcoin projects in 2024.
Airdrop potential
With Nubit receiving solid funding, backed by known VC's, having a strong team and attempting to build solutions to known Bitcoin problems, the potential for an airdrop is high. There are currently Galxe quests available to put you in a position to capitalise on a future airdrop. Complete the tasks below to be in with a chance.
Install Keplr Wallet:
Visit the Keplr website:Â keplr.app/download and install the Keplr wallet extension for your browser.
Add Nubit Testnet to Wallet:
Go to the Keplr chain list:Â chains.keplr.app
Search for "Nubit Alpha Testnet".
Click on "Add to Keplr".
Open your Keplr wallet extension.
Go to "Manage Chain Visibility".
Locate and tick the checkbox for "Nubit Testnet" network to add it.
Claim Faucet:
Copy your Nubit address from your Keplr wallet.
Go to the Nubit faucet:Â faucet.nubit.org
Paste your copied address in the designated field.
Click on "Get Nub" to claim some testnet Nubit (NUB).
Complete Tasks:
Go to the Nubit Alpha Testnet campaign page:Â alpha.nubit.org/#/
Click "Connect Wallet" and connect your Keplr wallet containing the Nubit Testnet address.
Scroll down to find the available tasks for the Galxe campaign.
Complete the tasks listed on the Galxe platform (link not provided but it can be found on the Nubit Alpha Testnet campaign page).
Once completed, return to the Nubit Alpha Testnet campaign page and click on "Verify to claim maximum 3000 points".
Complete Genesis Galxe Quest (Optional):
Visit the Galxe platform https://app.galxe.com/quest/Nubit/GCMt1tdj4s?referral_code=GRFr2JOjO6m7VSPv5tKPYejuGmAo5MCmrIIEY1K6POPP83G to participate in the Genesis Galxe Quest for additional rewards.
A central focus of investor activity in the cryptocurrency space is the evaluation of new crypto projects to invest in, particularly those with huge potential. This blog provides insight into what new ventures are benefiting from venture capital support (VC funding in crypto). These new crypto projects, funded by professional investors, can dictate the next narrative in crypto and the next big crypto movers.
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