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kEscoda

Digital strategy

Innovation Leader

Digital Transformation

Communication Expertise

Blockchain (DeFi, Tokenomics)

AI (prompting & integrations)

PM / PMO / Business Dev

Content Management

Audio / Video (prod & post-prod)

Blog Post

BitVM: why everyone is talking about it (for better… or worse)

August 12, 2023 Blockchain
BitVM: why everyone is talking about it (for better… or worse)

As you know, I love to dive deep into Bitcoin economy and development. And talking about it, an innovation has recently emerged that could potentially reshape the capabilities of the Bitcoin network. On October 9, 2023, Robin Linus, a prominent researcher and developer in the space, released a white paper titled “BitVM: Compute Anything on Bitcoin.” This paper has sent ripples through the crypto community, sparking intense debate and speculation about the future of Bitcoin’s functionality.

Article originally prepared in Italian for my personal podcast Disruptive Talks (read it here).
This content is also available as an audio podcast, here, and in video/audio, here.

Given the recency and potential impact of this proposal, it’s crucial to delve deeper into BitVM, understanding its implications, possibilities, and the controversies surrounding it. This paper, published just days ago, represents a significant leap in theoretical Bitcoin development, proposing a method to bring Turing-complete smart contracts to the world’s first and most valuable cryptocurrency without altering its core protocol.

The timing of this release is particularly noteworthy. As the cryptocurrency market continues to mature and other blockchain platforms expand their smart contract capabilities, Bitcoin has often been criticized for its limited programmability. BitVM arrives at a juncture where the Bitcoin community is actively seeking ways to enhance the network’s utility while preserving its fundamental principles of security, decentralization, and immutability.

What is BitVM, and how it works?

Robin Linus, through his paper, has introduced an innovative framework that allows Bitcoin to access Turing-complete contracts while preserving Bitcoin’s fundamental consensus rules. In other words, BitVM would enable the introduction of virtually any arbitrary computation into the Bitcoin ecosystem, executed off-chain. It presents itself as a computational paradigm that allows for the expression of Turing-complete contracts on Bitcoin without the need to modify the network’s consensus rules. It is a a sort of extension that allow Bitcoin to perform more sophisticated calculations without modifying it at the protocol level.

This feat would be accomplished by executing Bitcoin’s contract logic outside the main blockchain while maintaining final verification on the Bitcoin network. The mechanism is similar to Ethereum’s optimistic rollups.

Delving deeper, Linus explains that the system is based on fraud proofs and a challenge-response model between two parties: a “prover” and a “verifier.” The prover makes assertions, while the verifier checks that they are true, punishing the prover if false statements are made.

The key idea is that complex computation is first executed and verified off-chain, but in case of disagreement or perceived unfair behavior, it can be contested on-chain by activating formal verification on the Bitcoin blockchain. The final on-chain verification mechanism is similar to that of Ethereum’s optimistic rollups.

To illustrate the concept of BitVM, let’s examine this diagram:

The image shows a complex circuit composed of 8 different NAND gates with 4 inputs labeled A, B, C, and D. This circuit represents a random example of how complex computations can be constructed using simple logic gates. The diagram demonstrates that by using billions of such gates, we could define virtually any function.

In the context of BitVM, this circuit serves as a metaphor for the kind of complex computations that could be represented and verified off-chain. The inputs (A, B, C, D) could represent initial conditions or transaction parameters, while the interconnected NAND gates symbolize the logical steps of a smart contract or complex computation. The final output (labeled “TRUE” in the diagram) would represent the result of the computation that needs to be verified.

This visual representation underscores the potential of BitVM to enable sophisticated, Turing-complete computations within the Bitcoin ecosystem, all without changing Bitcoin’s core protocol. It illustrates how complex logic can be built from simple components, mirroring how BitVM could allow for advanced smart contract functionality on top of Bitcoin’s existing structure.

Possibilities opened by BitVM

Currently, Bitcoin is primarily limited to elementary operations at the scripting level. With BitVM, the computational possibilities seem to expand significantly. One can imagine the execution of games like chess or poker through Bitcoin contracts or the creation of bridges between BTC and other blockchains.

Linus himself envisions a future where decentralized prediction markets and new opcodes could emerge thanks to BitVM, expanding Bitcoin’s uses.

However, it’s not all smooth sailing. Linus acknowledges some technical limitations, particularly the fact that BitVM currently operates mainly in a bipartite context, requiring a large amount of off-chain computation and communication.

The next step, according to Linus, would be the full implementation of BitVM along with Tree++, an advanced programming language designed for Bitcoin that would allow for fully leveraging BitVM’s potential.

But what’s the deal behind it?

BitVM has elicited a spectrum of responses within the Bitcoin community, reflecting the proposal’s potential impact and complexity. Prominent voices in the space have weighed in, showcasing the diversity of opinions surrounding this innovation.

Eric Wall, a well-known cryptocurrency researcher and advocate, has expressed enthusiasm for BitVM, highlighting its potential to bring advanced smart contract functionality to Bitcoin without compromising its core principles. Similarly, Dylan LeClair, a macro analyst and Bitcoin proponent, has welcomed the initiative as a promising development for expanding Bitcoin’s utility.

However, not all reactions have been unequivocally positive. Adam Back, CEO of Blockstream and a significant contributor to Bitcoin Core, has urged caution. His reservations stem from the proposal’s preliminary nature and the need for rigorous peer review and testing before any implementation can be considered.

In fact, while the concept of BitVM is innovative, it faces several technical hurdles that need to be addressed:

  1. Computational complexity: the off-chain nature of BitVM computations means that verifying complex operations could require significant computational resources. This raises questions about the practicality of implementing sophisticated contracts in real-world scenarios.
  2. Network latency: the challenge-response mechanism central to BitVM might introduce latency issues, especially for time-sensitive applications. This could limit its usefulness in certain types of financial contracts or rapid-execution scenarios.
  3. Storage requirements: although the bulk of data is kept off-chain, there are concerns about the long-term storage implications for participants who need to maintain records of their interactions for potential dispute resolution.
  4. Security considerations: the introduction of more complex logic opens up new attack vectors that need to be thoroughly analyzed and mitigated to ensure the overall security of the Bitcoin network is not compromised.
  5. Scalability beyond two parties: extending the system to support multi-party contracts presents significant challenges in terms of coordination, verification, and dispute resolution.

These challenges underscore the need for extensive research, development, and testing before BitVM could be considered for practical implementation. The Bitcoin community’s cautious approach reflects a commitment to maintaining the network’s stability and security while exploring avenues for innovation.

My two cents

As a long-time observer and enthusiast of Bitcoin’s development, I find myself both intrigued and cautious about BitVM. My appreciation for Bitcoin has always been rooted in its fundamental attributes: its resilience, decentralization, and its role as a secure digital asset. These core features should never be compromised.

That being said, BitVM represents a fascinating approach to expanding Bitcoin’s capabilities. What particularly catches my attention is how it aims to introduce complex computations without altering the base layer protocol. This aligns with the conservative approach to Bitcoin development that I’ve always advocated for.

In the coming months, I’ll be paying close attention to the technical discussions surrounding BitVM, particularly focusing on how it addresses these concerns. I’m especially keen to see practical examples of applications that could be built using this technology.

While I remain cautiously optimistic, my stance is clear: any advancement, no matter how promising, must not come at the cost of Bitcoin’s core principles. The beauty of Bitcoin lies in its ability to evolve while maintaining its fundamental integrity.

For further inquiries or assistance with Bitcoin, Blockchain integration or DeFi, feel free to reach out.


Notes

For those interested in delving deeper into BitVM and staying updated on its development, here are some valuable resources:

BitVM Chat Telegram:
BitVM Telegram

Original BitVM Whitepaper:
BitVM: Compute Anything on Bitcoin

Robin Linus’s (BitVM creator) Twitter:
@robin_linus

Bitcoin Optech Newsletter covering BitVM:
Bitcoin Optech Newsletter #272

GitHub Repository for BitVM:
BitVM GitHub

Bitcoin Core Development:
Bitcoin Core GitHub

Bitcoin Developer Mailing List (for technical discussions):
Bitcoin-dev Mailing List

Bitcoin Magazine article on BitVM:
BitVM: Bitcoin’s Pathway To Turing-Complete Contracts

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