By enhancing Bitcoin's smart contract functionality without altering the blockchain's consensus procedures, BitVM is a new computing model. The white paper, which was released on October 9, 2023, has received a lot of attention and criticism.
Can BitVM Create a New Standard for Smart Contracts on Bitcoin?
Blockchain programmer Robin Linus recently put up the idea of BitVM in a white paper. With the use of fraud proofs and a challenge-response protocol between two parties, it enables the creation of Turing-complete Bitcoin contracts. Some claim the approach has limitations, while others assert that it opens the door for more complex Bitcoin transactions.
In order for BitVM to function, a prover must assert that a program executes correctly for a given set of inputs and outputs. A sequence of concise fraud proofs can be used by the verifier to refute that claim, punishing the prover if their claim is untrue.
Both the prover and verifier may do complex computations with a small onchain footprint by encoding the program into a binary circuit and committing to it bit by bit in a Taproot address. According to the white paper, this enables any computed functions to be verified on Bitcoin. BitVM, however, is limited to a two-party setup between a prover and a verifier at this time.
The report highlights negative aspects such significant off-chain computation for both parties. However, it presents BitVM as a novel strategy to increase Bitcoin's capabilities without modifying the protocol. This indicates that a soft fork or hard fork are not necessary to change the consensus rule set.
The model's existing utility has drawn criticism from several developers. Blockstream CEO Adam Back commented on the social media website X (formerly Twitter): "Cool but really a generalization of a two-party game." Nikita Zhavoronkov, the lead developer for Blockchair, dubbed it "Cool, but overhyped," claiming BitVM can't "even multiply numbers efficiently." The creator continued:
Not a "EVM on Bitcoin," for sure.
However, the fundamental design of BitVM raises the possibility of using it to support more complex smart contracts on Bitcoin in the future. The two-party limitation means that processes like token exchanges are now impractical.
Sam Parker noted in a comment on the social media platform X that BitVM increases capabilities without modifying the protocol, reducing the risk of ossification. According to cryptocurrency expert Sunny Decree, a "new Bitcoin white paper enables all Altcoin utilities on Bitcoin" and emphasizes "no soft fork required."
The ability to integrate a ZK verifier in the BitVM, according to Bioniq CEO Bob Bodily, is what excites him the most. We still don't know when, when, how, or even if this will occur, but if you could add a ZK verifier to the BitVM, you could fully utilize L2s on Bitcoin. Increased scale, increased programmability, increased throughput, increased privacy, cheaper transactions, etc. Without a Bitcoin update, too.
BitVM is referred to in the white paper as a "novel design space" for off-chain processing and Bitcoin contracts. Its applications could become more varied as research advances to properly demonstrate Bitcoin's innate computational power. In the short term, BitVM allows a prover and verifier to run Turing-complete programs with payments, verifying results using Bitcoin's present fraud-proof scheme and expanding the potential of smart contracts without altering the protocol.
The project has been receiving donations in addition to the white paper at the address listed at the bottom of the document. The donation address "bc1qf" has received 0.18555681 BTC, which at the current exchange rate is worth little over $5K.
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