Bitcoin-IPC: Scaling Bitcoin with a Network of Proof-of-Stake Subnets

2025-12-29

AI Summary

To address Bitcoin’s low mainnet throughput (~7 TPS), high transaction costs, and lack of native programmable payment support, this paper proposes a Layer-2 scaling architecture that requires no modifications to the Bitcoin L1. It constructs a proof-of-stake (PoS) subnet network atop Bitcoin’s SegWit, using native BTC as the sole staking asset to enable a decentralized, full-stack-compatible, scalable payment system. Innovatively, it embeds a SWIFT-style messaging mechanism directly into SegWit scripts, enabling the L1 to serve simultaneously as a communication hub and final settlement layer. The design includes a lightweight subnet consensus protocol, a BTC-native staking bridge, and an atomic cross-subnet interchain routing protocol. Experimental results demonstrate a system throughput exceeding 160 TPS and a 23× reduction in virtual byte cost. Crucially, this is the first solution achieving high-concurrency, low-overhead, programmable cross-subnet value routing while preserving Bitcoin’s L1 entirely unchanged.

Technology Category

• Data Mining & Knowledge Management: Scalability, Parallel & Distributed Systems
• Machine Learning: Scalability of ML Systems
• Multiagent Systems: Mechanism Design

Application Category

• Security and Privacy: Cryptocurrency and smart contracts
• Economics, Online Markets and Human Computation: Economic aspects of blockchain and cryptocurrencies
• Systems and Infrastructure for Web, Mobile and WoT: Decentralized Web and Fediverse systems

Abstract

We introduce Bitcoin-IPC, a software stack and protocol that scales Bitcoin towards helping it become the universal Medium of Exchange (MoE) by enabling the permissionless creation of fully programmable Proof-of-Stake (PoS) Layer-2 chains, called subnets, whose stake is denominated in L1 BTC. Bitcoin-IPC subnets rely on Bitcoin L1 for the communication of critical information, settlement, and security. Our design, inspired by SWIFT messaging and embedded within Bitcoin's SegWit mechanism, enables seamless value transfer across L2 subnets, routed through Bitcoin L1. Uniquely, this mechanism reduces the virtual-byte cost per transaction (vB per tx) by up to 23x, compared to transacting natively on Bitcoin L1, effectively increasing monetary transaction throughput from 7 tps to over 160 tps, without requiring any modifications to Bitcoin L1.

Problem

• Scaling Bitcoin to become a universal Medium of Exchange
• Enabling permissionless creation of PoS subnets with BTC stake
• Increasing transaction throughput without modifying Bitcoin L1

Innovation

• PoS subnets with BTC stake for scaling
• SegWit-based cross-subnet value transfer routing
• 23x lower vB cost boosting throughput to 160 tps