Maria Irene
What Is BitVM?
At its core, BitVM is a system designed to express Turing-complete Bitcoin contracts. Simply put, this means you can theoretically execute any computation you can think of, right on the Bitcoin network. But there’s a catch—instead of running these computations directly on the network, they are verified in a similar fashion to “optimistic rollups,” a concept already in use on other blockchain platforms.
Here’s how it works: A ‘prover’ claims that a given function, when applied to particular inputs, produces a specific output. If this claim turns out to be false, then a ‘verifier’ can perform a succinct fraud proof and punish the prover. This verification process enables any computable function to be executed on the Bitcoin network.
Why Is This Important?
To date, Bitcoin’s architecture was thought to be fairly limiting in terms of its ability to support smart contracts or complex operations. It primarily supports basic operations like signatures, timelocks, and hashlocks. BitVM opens up a novel design space for more expressive Bitcoin contracts and off-chain computations.
Imagine the possibility of playing complex games like Chess or Poker, building prediction markets, or even creating bridges between Bitcoin and other cryptocurrencies—all directly on the Bitcoin network.
The Architecture
BitVM borrows heavily from existing mechanisms such as Optimistic Rollups and the MATT proposal (Merkelize All The Things). However, it achieves this without requiring any changes to Bitcoin’s existing rules. The key to BitVM’s operation lies in its use of hashlocks, timelocks, and large Taproot trees.
In the BitVM system, the prover and verifier both compile the program into a binary circuit. This circuit is then committed to a specific Bitcoin address using Taproot. If any fraud is detected, the verifier can quickly disprove the prover’s claims through a series of challenges and responses.
Off-Chain Operations
A considerable amount of computational work and data exchange happens off-chain. This makes BitVM less burdensome on the Bitcoin network, resulting in a minimal on-chain footprint. In case of disputes or disagreements, the process moves to on-chain execution for resolution.
The Downside
While BitVM offers an array of possibilities, it also comes with its share of limitations. One of the significant drawbacks is that it currently only supports a two-party setting—a prover and a verifier. But the architecture leaves room for future research that could potentially allow for more complex interactions involving multiple parties.
What lies ahead?
The BitVM model is still in its nascent stages and a lot of research is required to refine its limitations and extend its capabilities. One of the exciting prospects is its potential integration with existing off-chain protocols like the Lightning Network or other types of rollups.
BitVM represents a seismic shift in how we understand and use Bitcoin. By allowing Turing-complete contracts on the Bitcoin network without altering its existing rules, BitVM presents the community with a host of new opportunities to expand the network’s functionalities. While still in early stages, BitVM offers a tantalising glimpse into Bitcoin’s promising future.
