BitVM: The Future of Bitcoin Smart Contracts?

In a significant development for the world of cryptocurrencies, a new proposal has been put forth to bring more expressive off-chain smart contracts to Bitcoin. The proposal, titled “BitVM: Compute Anything on Bitcoin”, was announced in a white paper by ZeroSync’s project lead, Robin Linus.

BitVM Promises to Deliver Interesting Features for the Bitcoin Network

BitVM is designed to bring the power of Turing-complete contracts to Bitcoin without the need for changes to Bitcoin’s consensus rules. A system that is Turing-complete has the theoretical capability to solve any computational problem.

The execution of the “logic” of Bitcoin contracts takes place off-chain but is subsequently verified on Bitcoin. This is akin to the way Ethereum’s optimistic rollups function.

The structure of BitVM is grounded on the principles of fraud proofs and a challenge-response model. In this model, an entity known as the “prover” can make assertions, while another entity, the “verifier”, has the ability to conduct a fraud-proof. This process allows the verifier to penalize the prover in instances where false assertions are made.

Linus has clarified that Bitcoin’s existing capabilities are confined to fundamental operations such as signatures, timelocks, and hashlocks. However, the introduction of BitVM expands these capabilities, enabling the computation of a wide range of intriguing applications.

Possible uses could encompass games such as Chess, Go, or Poker, and notably, the verification of validity proofs within Bitcoin contracts. Furthermore, it could potentially enable the bridging of BTC to external chains, the establishment of a prediction market, or the emulation of new opcodes.

Linus has also highlighted that the model is restricted to a two-party scenario involving a prover and a verifier and that substantial off-chain computation and communication are required to execute programs.

The forthcoming goal for the project is to fully incorporate BitVM, along with Tree++, a sophisticated programming language designed for the creation and debugging of Bitcoin contracts.