Provided the Bitcoin is locked into some kind of redeemable smart contract, a Layer 2 sidechain could theoretically do anything. Even a state sponsored CBDC.
Discussion
Yea that’s what I was thinking too. It’s kind non intuitive but makes sense once I think more about it.
The only thing you can’t do directly is transfer the sats from one L2 to another L2 right? That would involve unlocking the sats on the blockchain?
Not necessarily. Two parties could do an atomic swap between L2 chains.
Doing that at scale though would require market makers to provide liquidity. That would typically come with a cost.
I have faith though. #Bitcoin has some of the smartest people in the world working on the scalability problem. They just don't get the recognition they deserve because development is slow and calculated.
Yea, it’s not direct but i like atomic swaps. I do swaps between Lightning and Liquid every once in a while. Although, I worry about the market makers putting a target on their back.
I also think we should be careful about claiming that we can do anything on L2’s even though I think a lot of the scaling issues will be worked out over time.