Author: YBB Capital Researcher Ac-Core
I. Why Can't Bitcoin Buy Coffee?
When people think of Bitcoin, they first consider its "decentralized" and "immutable" attributes. However, when you actually want to use it to buy a coffee, you'll quickly encounter an awkward problem: the transaction confirmation time is longer than waiting for coffee, and sometimes the transaction fee is even more expensive than the coffee itself. Assets on Bitcoin remain "motionless" - mainly relying on HODL, unable to be loaned, combined, or interoperable.
Bitcoin Script's script structure is extremely conservative, limiting most off-chain interaction scenarios. It was not originally designed to process thousands of payments per second. But the practical demand is clear - people simply want Bitcoin to be usable, even if it's just buying a game skin or tipping a video, without wanting to wait ten minutes.
II. Lightning Network: A Double-Edged Sword
Image source: Cointelegraph
Bitcoin's main chain is like a highway, while the Lightning Network is like a toll express lane built alongside it. Its core concept stems from a compromise on main chain transaction efficiency: since on-chain transactions have speed bottlenecks, it no longer insists on recording every transaction on the chain, but instead establishes exclusive "payment channels" between users for high-frequency accounting, ultimately only synchronizing the final fund status to the blockchain when the channel closes. This mode is similar to friends taking turns paying for meals - people won't immediately bank transfer after each meal, but settle accounts after accumulating ten consumptions. The Lightning Network is essentially a transaction network woven from tens of thousands of such payment channels.
However, this seemingly ingenious system has exposed multiple challenges in practical application. First, the high barrier to channel establishment requires users to lock funds in advance to create a transaction channel, meaning they must pre-establish a dedicated channel to transact with any object. Secondly, there's a complex routing problem - when user A and B lack a direct channel, even if an indirect A-C-B path exists, the transaction will fail if intermediate channel funds are insufficient or path nodes are unavailable. More seriously, the security risks require users to remain online to prevent counterparties from submitting expired transactions fraudulently during channel closure, which poses an unrealistic maintenance requirement for ordinary users.
Although the Lightning Network has been online for many years, these structural defects have made its practical application consistently unable to break through bottlenecks. Public data shows that the current Lightning Network's fund lock-up is only around $100 million, which is almost marginalized compared to Bitcoin's trillion-level market value. This inevitably prompts industry reflection: can we construct a more comprehensive off-chain payment protocol to break through the current predicament?
According to ChainCatcher on April 15, HSBC disclosed in an official press release that Bitcoin Thunderbolt is the most milestone technical upgrade of Bitcoin in a decade. The overall observation of Thunderbolt is more like a "Lightning Network 2.0", but it is not just an upgrade, but more like a reconstruction of the off-chain Bitcoin interaction paradigm.
III. What is the Thunderbolt Protocol
Image source: Nubit | Bitcoin Thunderbolt
Bitcoin Thunderbolt is a soft fork upgrade based on the Bitcoin base layer, which is not a compromise solution relying on a second-layer network or cross-chain bridge, but directly modifies the protocol level of the Bitcoin main chain, fundamentally improving Bitcoin's scalability, transaction performance, and programmability.
From a performance perspective, Nubit leverages UTXO Bundling technology, achieving significant optimization of Bitcoin's traditional transaction processing mode. Traditional Bitcoin networks are limited in transaction speed and throughput due to the single UTXO mode. UTXO Bundling allows multiple UTXOs to be processed together, equivalent to compressing transaction data volume, thereby improving transaction speed by about 10 times without compromising security.
In terms of programmability, Bitcoin Thunderbolt reintroduces and expands the OP_CAT opcode (which originally existed in early Bitcoin versions but was later removed). OP_CAT allows data concatenation operations, enabling developers to construct more complex script logic, thus directly implementing smart contracts on the Bitcoin main chain. The most direct benefit of this upgrade is that developers can deploy decentralized applications (dApps) on the native Bitcoin network without relying on sidechains, Rollup, or cross-chain bridges.
In terms of asset protocol integration, Nubit advocates and implements a unified standard called Goldinals. Goldinals provides an asset issuance framework based on zero-knowledge proofs and state commitments. Simply put, this is a "Bitcoin-native" token standard that does not rely on external trust institutions or require complex cross-chain bridges to verify each token's existence and state on-chain. BitMM integrates scattered BRC-20, Runes, and Ordinals protocol assets running on Bitcoin.
Unlike traditional expansion ideas (such as using sidechains, Plasma, Rollup, or bridged wrapped tokens), Nubit adopts a "main chain native expansion" path. BitVisa provides a decentralized identity and credential system. Whether transaction compression, smart contract support, asset standard integration, or on-chain transaction matching - all run directly on the Bitcoin main chain. Using native BTC, not cross-chain mapped tokens.
3.2 Protocol Design and Key Innovations of Thunderbolt
Non-Interactive, Recursive Signature Delegation
A set of tweakable threshold Schnorr signature structure was designed. Traditional payment channels often require multiple message exchanges, while Thunderbolt only needs to "send a signature with a small secret" each time, significantly reducing online requirements.Changing "New Lock" for Each Transfer
During each hop transfer, Alice and the committee update the signature with a new small secret, completely invalidating the old "lock". This prevents anyone from obtaining the new signature, preventing reuse of old signatures.Leaving Only One Trace on the Chain
Only one "locking" is done on-chain at the beginning, with all subsequent changes completed off-chain, and finally spending the money on-chain. Compared to the Lightning Network's constant channel opening and closing, Thunderbolt has fewer on-chain operations and better privacy.No Money Loss Offline
Even if Alice or Zenni is offline, as long as the majority of the committee is online, transfers or redemptions can be completed at any time, without worrying about time lock expiration or malicious channel closure.Truly "Machine-Proven" Security
All critical steps in the protocol have been "formally verified" using Tamarin Prover, meaning these security guarantees are not just theoretical but have been repeatedly checked by automated tools.
Four, How is Thunderbolt Different from Existing Lightning Network Solutions?
Let's compare Thunderbolt with existing solutions (such as BOLT protocol, Breez SDK, Phoenix) to see what improvements it has made.
Differences between Thunderbolt and existing Lightning Network solutions:
We can see that Thunderbolt's main advantages are in "security" and "theoretical completeness". It is one of the few that can:
Prove that the protocol design is secure
Malicious users cannot unilaterally profit at any state
But its disadvantages are also obvious:
Complex Deployment: To use Thunderbolt, you currently need to run the full protocol stack, which is difficult for ordinary wallet users
Main Chain Compatibility: Bitcoin's script language is too primitive, so Thunderbolt must implement functions through clever detours, increasing implementation difficulty
Ecosystem Support Lacking: Unlike BOLT, which already has many wallet and node supports, Thunderbolt is currently still in the "early research stage"
Five, Potential Impact of Thunderbolt: Catalyst for BTCFi?
Image source: Self-made
Is Thunderbolt the optimal solution for BTCFi? Let's propose a bold perspective:
Thunderbolt is currently the theoretically optimal solution for BTCFi, but practically still in the "Alpha stage". In other words, it's like the "Ethereum 2.0 whitepaper" of the Bitcoin world - full of foresight but not yet at the "engineering system-level" implementation stage. Based on current observations, I believe Thunderbolt may have three potential development paths:
1. Integrated into Rollup: As a DeFi Engine for Bitcoin Side
Bitcoin's main chain lacks scalability, so Thunderbolt may ultimately become an off-chain module on a Bitcoin L2 (such as BitVM, Nomic, BOB). This is similar to "integrating Thunderbolt as a universal contract execution layer in Rollup".
For example:
BOB can integrate Thunderbolt channel layer to achieve native BTC trading
RGB ecosystem might introduce Thunderbolt state management logic
BitVM supports more complex logic, Thunderbolt will become one of the contract standards
Serving Babylon, Bitlayer, and other systems
2. Form an Independent Standard Ecosystem, Running Parallel to the Main Chain
Thunderbolt's biggest potential is to develop its own network ecosystem, node maintenance system, aggregators, etc., similar to the Lightning Network, and even form Thunderbolt-LSP operators. Meanwhile, Nubit's protocol-layer soft fork upgrade in collaboration with Satoshi Nakamoto era miners introduced two major features: UTXO Bundling and OP_CAT, which can directly carry BTC protocol-type assets (BRC20, Runes, Ordinals), creating a vast space for imagination. In the future, it might have:
Thunderbolt Wallet (similar to Phoenix)
Thunderbolt Node (light node running channels)
Thunderbolt DEX (off-chain order matching)
Thunderbolt AMM (liquidity pools)
3. Replaced by Simpler Solutions
Of course, if a system emerges in the future that can achieve similar functions without state channels, formal languages, or off-chain protocol collaboration, Thunderbolt might just be a transitional product, such as:
BitVM implementing a more efficient contract execution environment
Cross-chain ZK technology allowing fully trusted deployment of BTC assets on other chains
A native Bitcoin protocol that unifies payment, lending, and contract modeling
Finally, from an ecosystem perspective, Thunderbolt's greatest significance is not that it can run payments, but that it makes Bitcoin assets have "off-chain contract composability" for the first time. This sounds abstract, but the DeFi explosion of Ethereum shows how critical this "composability" is. Ethereum's explosion benefited from the entire ecosystem of Solidity + Hardhat + Ethers.js + Metamask.
Thunderbolt's biggest highlight is introducing two major features: UTXO Bundling and OP_CAT. OP_CAT introduces native programmability to the Bitcoin network, while UTXO Bundling compresses transaction data size and increases on-chain throughput, similar to Ethereum's Rollup logic. It seems that unifying all Bitcoin ecosystem protocols and accommodating various assets and BitMM implementation is no longer just talk. However, Thunderbolt is currently still like "writing a very strong mathematical paper", and there is still a significant distance from developers being able to "actually use it".
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