How Hemi's Approach to Scaling Bitcoin is Different
By Will McKinnon January 6, 2025
Summary
- In this article, we’ll dive into some of the approaches scaling Bitcoin and more specifically, the Hemi Network’s approach to integrating the best of Bitcoin and Ethereum into one unified experience.
- Co-Founded by Bitcoin core developer Jeff Garzik and having raised a $15M seed round, Hemi is definitely one to watch as we get closer to its mainnet launch.
Introduction
With the eyes of the whole world on Bitcoin and its ecosystem given the incredible run it has had this year, the question now becomes, how can we make Bitcoin better and more usable? Initially the idea of building on top of Bitcoin was met with outrage from the hardcore BTC maxi crowd, however the demand for these products is obvious with the rise of Runes & Ordinals, the Lightning Network, and Layer 2 solutions like Stacks. Bitcoin gaining over a trillion dollars in market cap since January 1st 2024 has added even more fuel to the fire and there are now a number of efforts trying to address the issue of scaling BTC. Many of these focus on Bitcoin alone, adding rapid transactions or smart contract functionality to the network yet fail to allow for meaningful interoperability with other chains like Ethereum.
Source: Hemi
In this article, we’ll dive into some of the approaches scaling Bitcoin and more specifically, the Hemi Network’s approach to integrating the best of Bitcoin and Ethereum into one unified experience. Co-Founded by Bitcoin core developer Jeff Garzik and having raised a $15M seed round, Hemi is definitely one to watch as we get closer to its mainnet launch.
Comparing Top Approaches to Scaling Bitcoin
Since the tech behind these networks can get quite complicated, we broke down the major differences between popular approaches to Bitcoin L2’s in the market in the table below, with the key metrics of a top BTC L2 being Scalability, Security, and Interoperability. It’s important to note that while both Stacks and Hemi enable smart contract functionality on Bitcoin, Hemi has uniquely integrated the EVM in a way that allows seamless integration and transfers of assets between BTC and ETH.
| Network Name | Scalability | Security Mechanisms | Interoperability |
|---|---|---|---|
| Hemi Network | Hemi scales Bitcoin by integrating a full Bitcoin node within the EVM, creating the Hemi Virtual Machine (hVM). This allows developers to create dApps that leverage both Bitcoin’s security and Ethereum’s programmability. | Hemi developed the novel Proof-of-Proof (PoP) consensus mechanism where state proofs are published on the Bitcoin blockchain, ensuring robust transaction finality. | A feature dubbed ‘tunneling’ allows secure asset transfers between Bitcoin and Ethereum. Both Bitcoin and Ethereum are treated as unified components of the network. |
| Lightning Network | The Lightning Network scales Bitcoin through off-chain transactions via payment channels, making transactions near-instant. It is especially suitable for high-volume payments processing or microtransactions. | The Lightning Network employs smart contracts to secure transactions within payment channels, ensuring valid transactions and mitigating fraud risk. | Lightning supports interoperability by enabling cross-chain atomic swaps, allowing users to exchange Bitcoin for other cryptocurrencies seamlessly. |
| Stacks Network | Stacks improves Bitcoin transaction throughput by allowing block production to increase by an estimated 120 times, and reducing confirmation times from 10 minutes to just a few seconds following their upcoming Nakamoto upgrade. | Stacks uses Proof of Transfer (PoX), connecting its security to Bitcoin through miners that commit special Bitcoin deposits to secure the network. | While Stacks does enable smart contracts and dApps on Bitcoin, its interoperability with other chains is defined by its reliance on Bitcoin as a base layer. There are specific conditions for user withdrawals through peg-out mechanisms. |
What Sets Hemi Apart
Hemi differentiates itself from alternatives in its core ethos of integrating Bitcoin with Ethereum. By viewing them as two parts of one larger whole rather than independently, Hemi achieves a developer and user experience that feels like Ethereum while still accessing the security and liquidity offered by Bitcoin. While Stacks offers similar smart contract functionality, their approach is not a seamless integration with Ethereum which may limit the future capabilities of dApps built on the chain.
Lightning has a fairly niche role to play in scaling Bitcoin given it is designed specifically for payments, however with the rise of BTC as a store of value the use case for BTC as a unit of payment has similarly grown. As Lightning is focused on this above programmability and interoperability, it will likely remain the leader for Bitcoin payments. For all things beyond, the upcoming Hemi Network presents an attractive environment for builders looking to build on the Bitcoin ecosystem.
Other Approaches
Aside from the three approaches to scaling the Bitcoin network that we discussed above, there are a number of others being explored such as Merged Mining and Sidechains. Merged Mining allows miners to mine multiple networks simultaneously using the same computational power. In the context of Bitcoin L2's, Bitcoin is treated as the primary network due to its security and high hashrate, which can then be extended to a secondary chain. One example of a chain which utilizes Merged Mining architecture is the BOB hybrid L2, which aims to combine Bitcoin's security with Ethereum's liquidity.
Sidechains, in contrast to the other L2 designs we've discussed, operate as their own independent blockchains with their own consensus mechanisms. The connection between the Sidechain and the Bitcoin network is maintained via a two-way peg system, where assets are locked on Bitcoin then equivalent tokens are minted on the Sidechain, keeping a constant exchange rate between the assets. While Sidechains are inherently not as much of a "Bitcoin L2" as Hemi or BOB's approach, they offer advantages in that developers can experiment on them without affecting the main Bitcoin chain.
Wrapping Up
While there are a lot of existing solutions aiming to scale Bitcoin, none so far have achieved true interoperability between the Bitcoin and Ethereum ecosystems. Given how large these two chains are relative to the overall crypto market, bringing them together in a meaningful way for both users and developers is imperative. We are still waiting for an official mainnet launch date however we expect it to come in the next couple months, so keep an eye on Hemi’s X and future Beluga content to make sure you don’t miss it!
