Introduction

Fractal Bitcoin is a scalable computing system built on Bitcoin Core using recursive virtualization. Unlike traditional scaling solutions that introduce new structures, Fractal achieves efficient scaling while maintaining Bitcoin’s original network security and consistency. On September 9, 2024, Fractal Bitcoin’s mainnet went live, marking the first-ever native solution to achieve infinite scalability through the recursive expansion of Bitcoin Core.

Unlike most Bitcoin Layer 2 solutions, which focus on Ethereum Virtual Machine (EVM) compatibility, Fractal stays true to Bitcoin’s original architecture, which has drawn significant attention within the ecosystem. Fractal Bitcoin introduces new features, including the OP_CAT opcode, increasing the platform’s development potential. Developers see Fractal as a space for experimentation and expect it to ignite a wave of innovation on the Bitcoin network.

The Origins of Fractal Bitcoin

Fractal Bitcoin was created to address Bitcoin’s scalability issues. As Bitcoin’s transaction volume grows, the network faces challenges such as long confirmation times and high fees. Although solutions like the Lightning Network have been introduced, these often require additional infrastructure and can be complex to use.

To solve this, the UniSat team developed the concept of Fractal Bitcoin, aiming to improve network performance without altering Bitcoin’s core protocol. Fractal Bitcoin uses recursive layers to increase transaction processing capacity and speed while maintaining compatibility with Bitcoin’s mainnet.

As the first solution to expand Bitcoin Core code to infinite levels, Fractal Bitcoin offers exceptional scalability, making it suitable for large-scale applications while preserving Bitcoin’s security and consensus mechanisms.

Fractal Bitcoin is seen as a platform for innovation in the Bitcoin ecosystem. It provides developers with flexible tools and APIs, and its support for OP_CAT opens new avenues for technical experimentation.

Key Features of Fractal Bitcoin

BTC Compatibility: Fully compatible with Bitcoin Core (recursive instance)

Consensus: Proof of Work (SHA256d)

Mining: Merged mining (2/3 permissionless mining + 1/3 merged mining)

Block Time: Every 30 seconds

Native Token: FB

BRC-20 / Ordinals: Fully compatible with standards

Address Format: Bitcoin-compatible

Stablecoin: BRC-20 stablecoin

Wrapped Bitcoin: Wrapped BRC-20

TPS: Over 120 transactions per second (per instance)

Ecosystem: Inherits Bitcoin’s protocol and toolset naturally

How Fractal Bitcoin Works

Recursive Virtualization

Fractal Bitcoin’s key innovation lies in its recursive virtualization technology. This approach creates multiple layers on the Bitcoin blockchain, each functioning independently while staying connected to the main Bitcoin chain. This design ensures that Bitcoin’s original security and consensus mechanisms are maintained consistently across all layers. Similar to how virtual machines can run multiple operating systems on a single computer, this technology allows for scalability without significantly adding to the system’s complexity.

Limitless Scalability

As blockchain technology is increasingly adopted, the need for more processing power and storage grows. Fractal’s layered structure offers a flexible way to scale. The design is inspired by fractals in mathematics, where each layer mirrors a smaller version of the Bitcoin network. By generating new layers recursively, the system can handle rising transaction demands without causing congestion. Each layer is linked to the main chain, allowing large transactions to be processed simultaneously, boosting the network’s overall efficiency. This design ensures the system runs smoothly and prepares it for future growth and technological breakthroughs.

Dynamic Load Balancing

Fractal Bitcoin also incorporates dynamic load balancing to maintain stable network performance. As network demand fluctuates, the system can intelligently manage resources, distributing transaction loads across different layers to prevent any single layer from being overwhelmed. Even during periods of high transaction volume, this mechanism keeps the network stable and efficient, similar to how cloud computing systems automatically manage resources.

Technological Innovations and Advantages

Security and Consistency

Scaling blockchain networks without sacrificing security and consistency is a significant challenge. Fractal Bitcoin addresses this by using Bitcoin’s Proof-of-Work (PoW) mechanism. Each layer created through recursive virtualization inherits Bitcoin’s security features, ensuring that the system remains secure and consistent regardless of how much it expands.

Faster Block Confirmations

Fractal Bitcoin reduces block confirmation times to around 30 seconds, 20 times faster than Bitcoin’s 10-minute confirmation time. This improvement speeds up transaction processing and enhances the network’s responsiveness, making it ideal for high-frequency trading and applications. The faster confirmation time also helps ease congestion related to BRC-20 tokens, Ordinals, and Runes, providing users a smoother experience.

Efficient Asset Transfers

Fractal Bitcoin makes asset transfers more efficient by supporting the secure movement of various digital assets across its layered network, including BRC-20 tokens, Ordinals, and Runes. The system uses a dynamic multi-party computation (MPC) signature system to ensure the safety and efficiency of transfers. Users don’t need to rely on wrapped tokens, allowing them to maintain the native form of their assets while simplifying the transfer process.

Smart Contract Capabilities

Fractal Bitcoin brings Turing-complete smart contracts to a Bitcoin-based platform by introducing the OP_CAT opcode. Initially part of Bitcoin’s script language, OP_CAT joins two items on the stack into one. For instance, if the stack has two strings or numbers, OP_CAT combines them into a single item. This feature opens up new possibilities for creating advanced DeFi protocols, complex NFT mechanisms, and other decentralized applications previously only available on the Ethereum platform.

Mining Mechanism

Fractal introduces a distinctive hybrid mining system. For every three blocks created, two are produced through open, permissionless mining, while the third block is mined using Bitcoin’s merged mining process. This innovative approach allows individual miners to participate in block production, promoting a decentralized network freely. At the same time, by using Bitcoin’s merged mining for one out of every three blocks, Fractal benefits from Bitcoin’s robust hash power, which boosts its own security. This mining method balances security with decentralization and encourages participation from Bitcoin miners, adding further energy and stability to the Fractal network.

Economic Model

Fractal has developed a well-rounded tokenomics system that ensures the project’s long-term sustainability while delivering maximum value to its community and investors.

Token Details

Name: FB (Fractal Bitcoin)

Max Supply: 210 million

Total Supply: 105,153,225

Circulating Supply: 1,213,225

Primary Use: Transaction fees within the Fractal ecosystem

Secondary Uses: Voting, application functions

Token Distribution

Fractal’s token allocation is designed to enhance network security, incentivize growth, and reward key contributors across the ecosystem. Here’s how the tokens are distributed:

• Proof-of-Work Mining (50%): Half of the total supply is set aside for PoW mining. This aligns Fractal with Bitcoin’s security model, helping to secure the network and ensuring steady block production.

Source: Fractal Bitcoin Official Documentation

• Ecosystem Treasury (15%): Funds in this treasury are allocated to support the Fractal ecosystem, financing projects that improve the network and further core developments. Up to 10% of these funds can be used each year for a period of 10 years.
• Community Grants (10%): Designed to foster partnerships and liquidity programs, these grants aim to increase community participation over time. Like the ecosystem treasury, 10% of these funds can be used annually for up to 10 years.
• Presale (5%): A portion of the tokens is reserved for early investors to cover initial development and operational expenses, as well as security audits. These tokens have a seven-month lock-up period and are released gradually over twelve months.
• Advisors (5%): Tokens are reserved for current and future advisors who will provide strategic advice and support for Fractal’s growth. A maximum of 20% can be released each year.
• Core Contributors (15%): This allocation goes to the developers and maintainers of Fractal’s core software. The lock-up and release schedule for these tokens is the same as that of the presale tokens.

Source: Fractal Bitcoin Official Documentation

Strengths and Weaknesses of Fractal Bitcoin

Strengths

Improved Scalability: Fractal’s recursive layer system greatly increases its ability to scale, enabling the network to handle more transactions and support complex smart contracts without compromising performance.

Preserving Bitcoin’s Qualities: Fractal Bitcoin maintains full compatibility with Bitcoin’s core code, keeping Bitcoin’s security and decentralization features intact while expanding its capabilities.

Weaknesses

Complex Architecture: Introducing the fractal structure makes the network more complex, and it may take time for users and developers to grasp and adapt to the design fully.

Risk of Centralization: If a small number of entities control the expansion layers, there’s a potential for centralization, which would go against the project’s decentralized nature.

Technical Risks: As with any new technology, Fractal’s implementation carries risks, such as potential software bugs and security vulnerabilities, which could affect the network’s stability.

Challenges and Problems

• Connectivity and Interoperability: If Fractal Bitcoin cannot seamlessly integrate with the Bitcoin network or provide efficient and secure solutions for cross-chain asset transfers, it risks being seen as an isolated system. This would directly affect how users and developers perceive its real-world value.
• Building Community Trust: The Bitcoin community is traditionally cautious about new projects, and earning trust can take time. To win over both users and developers, Fractal Bitcoin needs to demonstrate that its technology works as intended while offering an attractive economic model, strong security, and a well-developed ecosystem.

Conclusion

There remains ongoing debate over whether the Bitcoin ecosystem needs functional public chains. Previous Bitcoin Layer 2 public chains, like Merlin and B² Network, have struggled to gain widespread adoption, with many of their associated assets never progressing beyond the airdrop and mining stages. What sets Fractal Bitcoin apart is its independent PoW mining mechanism, which shows the characteristics of a sidechain. By attracting miners, it has managed to keep early momentum. Looking ahead, Fractal may develop innovative models that differ from Ethereum’s DeFi ecosystem or Bitcoin’s new token formats like BRC-20 and Rune, helping to push the industry forward.

In summary, Fractal Bitcoin’s fractal technology has the potential to expand and innovate within the Bitcoin network, but it also presents technical and governance challenges. Its success will hinge on how well it is received by the community, its technical performance, and its ability to balance Bitcoin’s core values.