Web3 on Bitcoin
Protocols like Ordinals, BRC-20, Runes, and Stamps embed arbitrary data in Bitcoin block space. This is widely considered spam: it bloats the blockchain, raises fees for everyone, and undermines Bitcoin's purpose as sound, censorship-resistant money. The Bitcoin standard is clear — Bitcoin is money, not a general-purpose data layer.
This page is included for awareness only. Understanding these protocols does not mean endorsing them.
Bitcoin is designed as a monetary system — a decentralized, censorship-resistant form of sound money. Some developers have built programmability layers on top of Bitcoin, ranging from legitimate off-chain contract protocols (DLCs, RGB) that respect Bitcoin's design, to data-inscription schemes (Ordinals, BRC-20) that abuse block space and are opposed by a significant portion of the Bitcoin community.
Discreet Log Contracts (DLCs)
DLCs enable conditional payments based on real-world events (oracle-based contracts) without revealing the contract details on-chain.
How it works:
- Two parties lock funds in a 2-of-2 multisig
- An oracle publishes a signed attestation of an outcome
- The winning party uses the oracle's signature to claim funds
- The oracle never learns about the contract's existence
Use cases: Betting, derivatives, insurance, prediction markets
Libraries:
Stacks
Stacks is a Layer 1 blockchain anchored to Bitcoin. It uses "Proof of Transfer" (PoX) consensus, where Stacks miners spend BTC to mine STX blocks.
Key features:
- Clarity — A decidable smart contract language (non-Turing-complete by design)
- sBTC — Programmable, trust-minimized Bitcoin peg
- Bitcoin finality — Stacks transactions settle on Bitcoin
;; Simple Clarity contract
(define-public (transfer (amount uint) (recipient principal))
(stx-transfer? amount tx-sender recipient))
RGB Protocol
RGB enables smart contracts and token issuance on Bitcoin using client-side validation:
- Off-chain computation — Contract state lives with the users, not on-chain
- Bitcoin as settlement — Only commitments are anchored on Bitcoin
- Privacy — Contract details are not visible on the blockchain
- Assets — Issue fungible tokens, NFTs, and more
Ordinals, Inscriptions & BRC-20
Ordinals, BRC-20, Runes, and Stamps exploit Bitcoin's witness data to embed arbitrary content (images, text, token data) on-chain. This drives up transaction fees, bloats the UTXO set, and crowds out legitimate financial transactions. They serve no monetary purpose and are broadly considered an attack on Bitcoin's block space.
- Ordinal theory — Assigns serial numbers to individual satoshis to simulate NFT-like ownership
- Inscriptions — Embeds arbitrary data (images, text, code) into witness data
- BRC-20 — A fungible token experiment built on inscriptions
- Runes — A newer token protocol also using Bitcoin block space for non-monetary data
Other Approaches
| Protocol | Approach | Status |
|---|---|---|
| Liquid | Federated sidechain (Blockstream) | Production |
| RSK | Merge-mined sidechain with EVM | Production |
| Ark | Off-chain UTXO sharing protocol | Development |
| BitVM | Optimistic computation on Bitcoin | Research |