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Bitcoin Magazine: Three conditions that Bitcoin Layer 2 must have.

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If Bitcoin were to experience a complete collapse and the system could still operate, then we do not consider that system to be a Layer 2 solution for Bitcoin.

Source: Bitcoin Magazine

Translation: Deng Tong, Golden Finance

Bitcoin seems to be severely undervalued.

With the release of the Ordinals protocol and BitVM whitepaper in 2023, the concept of possibilities for the Bitcoin base layer is undergoing a transformation. It is clear that Bitcoin is now absorbing the demands of other blockchains in the wider cryptocurrency ecosystem.

Of course, since the beginning of the 15-year history of this protocol, developers have been eager to add more functionality to Bitcoin. From early sidechains like Liquid and Rootstock to future L2 solutions.

However, a new wave of imitators is attempting to use these developments to promote arbitrary cryptocurrency tokens. In the Bitcoin L2 gold rush, the editorial committee of Bitcoin Magazine believes it is necessary to clarify its position on L2 reporting.

Bitcoin L2 must:

· Use Bitcoin as its native asset: L2 is fundamentally designed to use Bitcoin as its primary token or accounting unit, as well as the mechanism for paying for the system. If it has a token, it must be supported by Bitcoin.

· Use Bitcoin as a settlement mechanism to execute transactions: L2 users must be able to exit the system through a mechanism (trusted or untrusted) to return their fund control to L1.

· Displaying the functional dependence on Bitcoin: To determine whether a system is a Layer 2 of Bitcoin, we can look at its functional dependence on Bitcoin. Specifically, if Bitcoin were to completely collapse and the system could still operate, then we consider that system not to be a Layer 2 of Bitcoin.

Protocols built on top of Bitcoin that do not belong to the Layer 2 category, including:

· Protocol of Protocols: Systems like Counterparty (XCP) or Ordinals are protocols outside the scope of the Bitcoin protocol, existing and operating on Bitcoin Layer 1, but without their own independent blockchain.

· "Parasitic" Layer: These systems rely on Bitcoin to exist and cannot operate independently without it, but do not meet the other standards required to be considered Layer 2.