BitVM: Everything you need to know (and more...)

BitVM is a new Optimistic Roll Up + Fraud Proof + Taproot Leaf + Bitcoin Script computing paradigm designed by Robin Linus at Zero Sync. They published an excellent white paper this morning reviewed by Super Testnet and Sam Parker (post currently has 1.5M views!)

tl;dr

1. This is not a silver bullet solution

2. No, BitVM is not as good as EVM, BitVM is slower, more expensive, and more complex

3. The core benefit of BitVM is we get additional programmability right now on Bitcoin without an upgrade. No new op_codes needed. No soft fork needed. Ready to go right now.

4. Easy potential use cases include decentralizing various parts of applications that currently rely on centralized services (DLC oracles, congestion control/coinjoin aggregators, sidechain quorums)

5. No, BitVM doesn’t solve trustless bridging for sidechains (likely requires covenants)

6. Yes, BitVM is strictly better than Greg Maxwell’s 2016 ZKP contingent payments example

7. BitVM is VERY complex to understand and implement. Upgrading Bitcoin with an op_code could accomplish the same thing.

Technical Deep Dive

Alright, now let’s dig into the technical side of things. I am heavily quoting many others throughout my summary here because it was the safest way to stay true to what they said without misquoting them.

BitVM’s purpose is “any computable function can be verified on Bitcoin." - BitVM whitepaper

Which means that “Bitcoin is now as Turing Complete as any other chain, and this requires zero changes to Bitcoin” - Sam Parker

There are limitations (which we will get to later), but essentially what this means is as long as you:
(1) have enough money to pay for off-chain computation/proofs,
(2) have bandwidth to receive and send the necessary data (could be 100s of MB), and
(3) can do as many Bitcoin transactions as needed, THEN you can compute anything you want.

"All BitVM does is allow us to split the runtime of some logic that would be out of bounds of a single transaction across multiple transactions. That’s it."
- Sam Parker

So it might take a REALLY long time. And it might be REALLY expensive. And it might take hundreds of transactions. But you can do whatever you want. 😀

Reiterated by Sam himself: "So Bitcoin really isn’t any more Turing Complete by the technical definition as it was before, it simply has been given a runtime to its programs that we can reasonably say it’s “Turing complete enough” for any program that we could realistically want to execute."

One of the key benefits here is there is no upgrade required. You can do it all right now.

And you don’t have to use it if you don’t want to: "This is opt-in. If you don’t trust your coins being locked to some Turing complete contract (totally reasonable) then don’t lock them to a Turing complete smart contract." - Sam Parker

Since there will be some computational limits on what you can do, I think the lowest hanging fruit for something like BitVM is replacing a lot of the centralized “Bitcoin edge” services that people currently use.

For example we could "cut out all kinds of trusted or semi-trusted escrow services that a version of Bitcoin without this requires. Congestion control/Coinjoin aggregators, sidechain quorums, certain types of DLC oracles, all can go from trusted/semi-trusted to 100% trustless. Bitcoin’s trustlessness is only as strong as the weakest link in the interaction you are engaging in with it." - Sam Parker

Now let’s get into what Eric Wall thinks about it:

""I just read the whitepaper and all the concepts check out to me. I have a natural disinclination for schemes that require very large pre-signed transaction exchanges in a setup phase—I don’t know which issues may arise from such schemes. Overhead and permission are the two big issues.

For now, I’m cautiously excited, waiting for what the real-world experiments will yield. Maybe there are elegant, trivial solutions to the two-party limitations of this scheme, maybe there aren’t. Maybe the overhead is manageable for specific types of computation, like zk proofs.

If BitVM works well to verify a zk proof inside it, then that’s interesting—BitVM would then serve the role of the zkwasm layer [I’ve discussed previously]."" - Eric Wall

He then continued with what is probably the best succinct summary of BitVM:
"Is it correct to say that BitVM today only describes a way by which a verifier can steal a bond from a prover depending on the outcome of a turing complete computation, but doesn’t really describe an architecture for peg-in/outs for outside participants?"

The answer to his question is yes, this is exactly what BitVM is at this point.

Adam Back jumped in with a more critical comment (that has tons of views) "For people getting (over) excited, this is cool but effectively a generalization of a two-party game - it says right in the abstract - so it's a bit like Greg Maxwell's 2016 ZKP contingent payments implemented example".

Except Adam missed a part of the paper and this BitVM is actually strictly better than Greg Maxwell’s 2016 ZKP example. Quote from Robin: "It is strictly superior [than Greg Maxwell’s 2016 ZKP example because] in a ZKCP the prover has to know the solution upfront."

Super Testnet was a reviewer on the article and posted: "This is probably the most exciting discovery in the history of bitcoin script. It seems to knock down practically every door, and gives us access to covenants, sidechains, and powers similar to Liquid or the EVM, all at once with no forks required. I can't wait to publish my demo."

And to answer Eric Wall’s question about 1 to N party setups, Super Testnet posted: “It also allows for 1-N parties, similar to rollups. You can have a central party take a fee to perform computations for a group. Everyone in the group knows the central party cannot lie or the group can take, and distribute among themselves, a massive bond."

So some additional trust, but with nice economic trust assumptions as the central party loses in the event that they are dishonest.

One main downside to BitVM is the complexity. There is a lot of presigning that needs to occur in order for BitVM to work.

Rijndael commented: "Seems like CTV would cut down on the presigning. This would be great to build with current bitcoin and then figure out how much interactivity could be cut out with ctv and whether thats a nice to have or a must have".

If you aren’t up to speed here, CTV = BIP-119 = Simple Covenants. So if we upgraded Bitcoin to enable CTV, BitVM would be a lot nicer and more efficient.

Post Capone added his own take on the current positivity across many ecosystems within Bitcoin: "BitVM has spurred net positive commentary from 8 separate legions within bitcoin that notoriously slander each other into oblivion. Big stuff, man. Big stuff. Hats off to a lot of the analysis/feedback that has been piped out in such short order. It's very cool to see. Ordinals was a magical moment. This feels like it has the gas in the tank to double down on that. We're all clamoring over ourselves to hack it into working order."

BitVM is very similar to Lightning Network as (at least in the paper) there is a 2:2 multisig requirement.

Dylan LeClair posted: "Correct me if wrong: although technically much different, its like LN in the sense that it's a 2:2 multisig where TXs/apps/contracts can be built above bitcoin, but verification & settlement occurs on-chain. As I understand it this would enable trustless BTC peg-ins (?)".

To which Sam replied: "It enables basically anything you’d want to enable including trustless peg ins. It’s very similar in spirit to lightning in that way yes. I think running this protocol inside of a lightning channel is going to be the real power play personally. I suspect there’s a way to piggyback on Lightning’s justice transactions in a very synergistic way."

Some have doubted whether BitVM can support a global state due to the state-channel-like description in the article, but Super Testnet responded "It supports global state. Party A can prove statements to party B about a global ledger such as bitcoin or a sidechain or even an alt-chain."

Essentially BitVM “enables more expressive Bitcoin contracts. Particularly, it enables functionality that we thought we'd need a soft fork for. It might enable trustless sidechains, but that's not fully solved yet." - Super Testnet

And Rijndale responded that we likely still need covenants for trustless sidechains: “BitVM lets you spend ALL of a UTXO with a smart contract. For trustless sidechains we need to be able to spend PART of a UTXO with a smart contract".

Bob's take:

1. Another whitepaper, another round of podcasts, and another loop around the sun. BitVM is very interesting, but it is still in the research phase with much still to be explored, so TBD on how many problems BitVM can solve for us all.

2. There are likely some simple key use cases that could start leveraging BitVM right now to reduce trust assumptions (DLC oracles).

3. We need a variety of different paths to give us additional programmability on Bitcoin, so I applaud anyone working on solutions in this area (BitVM included). I hope tons of devs build really cool demos with it that solve big problems for people.

Thanks for reading! If I missed anything, please correct me or ask questions in the replies. And if you like my technical takes, you'll love The Very Good Bitcoin Club.

thevgbclub.com

1/ Ordinals and BRC-20 indexers are currently centralized (user patterns match the left graph).

The two most promising paths for a decentralized Ordinals/BRC-20 indexer in the near term are:

1. Build it on ICP
2. Build Sovereign Rollups 2/ First some background info.

An indexer:
1. Gets Bitcoin block data
2. Processes it using protocol rules
3. Makes the resulting state available

That's it. It is that simple.

The meteoric rise of @BitGod21 -> 0 to 100k followers in 48 days.

I read through all 6,817 tweets and summarized his winning strategy.

This is a fantastic case study on what everyone in crypto needs to know about branding, strategy, and growth.

1/21 1. Consistency

BitGod's first tweet was April 4th, 2023. Since then, he has tweeted 6,817 times.

That is 142 tweets per day. Yes, you read that right. 6 tweets per hour every hour of every day for the last 7 weeks 🤯🤯🤯

"The Great Ordinals Debate" was the talk of the town Friday at Bitcoin Miami.

@udiWertheimer & @ercwl
vs
the laser eyed Bitcoin Maxis

I was there in my wizard hat sitting right next to the creator of BRC-20.

Here's the breakdown on how it went down. The main points from the Bitcoin Maxis:
1. BRC-20 was intentionally designed by BSV devs as an attack on Bitcoin (this is false)
2. Images on BTC are all crap (this is also false)
3. Ordinals could increase evil MEV (this is partly true)

The key difference between smart contracts & meta-protocol indexers is smart contracts utilize cryptographic consensus to enforce & manage state of the contract, while indexers organize & make information about state more accessible, but do not provide any guarantees about state.

https://twitter.com/TO/status/1653751999828054017

So if you are building on a meta-protocol (ORD, XCP, BRC-20) to ensure a reasonable level of security & dZn you should pull data from a diverse set of trusted indexers. This provides a good balance between dZn, security, & performance, although it still isn't as robust as BTC L1.

I am very pleased to finally announce the release of

toniq.io

a complete redesign of Entrepot, now rebranded as the Toniq NFT Marketplace.

We’ll be running Toniq (ICP) & Bioniq (BTC) marketplaces in tandem. Read on for more info and why we're rebranding 👇 Entrepot was the first ICP NFT marketplace (2021) and has since grown into the largest NFT marketplace on ICP. We've launched over 500 NFT collections and done over $35M USD in volume.

We couldn't have done any of this without the support of the stellar ICP community.

Ordinal rarity is a huge topic, but nobody is talking about it in a comprehensive way.

So I've put together a framework on the 10 key attributes that define the collectability of an ordinal.

Enjoy! 👇 1. The Inscription Content

This is the actual content of the inscription, meaning what actually shows on explorers. This could include art, memes, historically significant artwork, provenance JSON, brc-20 messages, etc.

This is the foundation for everything else.

When $ckBTC is released this week, #ICP will easily be the best smart contract layer for #BTC (yes, better than stacks).

Never heard of $ICP? We're leveraging $ICP tech at @bioniq_nft to create the world's fastest non-custodial ordinals marketplace

🧵👇 ICP is the decentralized web services blockchain. Web services meaning you can host frontends, store assets, and do compute, all with a single smart contract (called a canister).

These are all bundled together in the same environment and all available within the smart contract.

So you’ve heard about Ordinal Inscriptions (NFTs on $BTC) but you haven’t done anything about it yet?

NOW is the time

Here’s everything you need to know about Ordinals in less than 5 min

👇👇👇 Key takeaways

1. Ordinals are not going away - going to be big
2. Storage on $BTC enables new functionality
3. Ordinals will result in increased interest and adoption for BTC
4. Tons of infrastructure being developed right now
5. We are all still early - only 333k inscriptions

The Internet Computer Protocol $ICP continues to improve.

@lastmjs and I frequently discuss building on the #IC: problems, pain points, bottlenecks

In our past few conversations, we've been running out of problems to talk about.

Here's what I'm most excited about for 2023: 🧵 Increasing the binary size limit.

Right now all of your canister code has to fit in 2MB. This is pretty low, especially if you are doing canister dev in Python.

They are working on increasing it which will enable standard library in Python, external dependencies, etc.

The definitive thread on the new SNS-1 DAO 💥

What are current network parameters?
How do proposals work?
What can we actually do as a community?
How do we view proposals and vote?

For the technical and non-technical folks of the great $ICP ecosystem.

Let's go 👇 First up - current network parameters.

Default followees = None
Proposal rejection cost = 0.1 token
Neuron min stake = 0.1 token
Max dissolve delay = 100 years
Max neuron age for age bonus = 6 months
Min dissolve delay to vote = 30 days 10 hours 30 min
Txn fee = 0.00001 tokens

Turn-key DAOs (SNS) are coming to $ICP soon! 🎉

The SNS might be the first DAO-generation tool that creates 100% on chain DAOs across all of Web3💥

The SNS isn't a silver bullet though, so let's dive into the pros and cons of using a DAO creation tool like the SNS:
👇 The Service Nervous System (SNS) will be released soon and builders on $ICP can use it to do a Decentralization Sale, where they sell/airdrop governance tokens and give control of their dApp (FE/BE) to a governance smart contract.

Volt is a smart wallet solution on $ICP. Every user gets their own canister (technical view)

But in reality, think about it less like a wallet and more like the center of an entirely new ecosystem of amazing Web3 products

Here's why the Volt ecosystem is going to be massive⚡️👇 Smart contract wallets have been around a long time, and exist on many chains, but we're just barely starting to scratch the surface on what they can do on the #IC.

Smart wallets might be hard to understand for non-technical folks, but trust me, they are going to be the future.

Heated community discussions are happening everywhere on #ICP right now.

I would like to reposition the discussion from solution-focused to problem-focused.

Let's talk about WHY this is happening. What is the problem?

Once we agree on the problem we can discuss solutions
🧵👇 1. There is one major contributor to the development of the Internet Computer Protocol (ICP) right now
2. There is one entity reviewing new protocol changes
3. There is one entity giving out grants to ecosystem projects
4. There is one entity establishing the roadmap of the IC

I've been talking with @danostrovsky and @rckprtr about how to grow the #IC, which inspired my poll yesterday.

Based on discussions, my current thesis is that focusing on bringing in more Web 2 users is likely the right move for the majority of #ICP companies.

A thread...🧵👇 To understand why expanding to Web 2 users is the right path forward, let's look at the technology adoption lifecycle.

New tech adoption starts at the left and moves to the right:
Innovators: 2.5%
Early Adopters: 13.5%
Early Majority: 34%
Late Majority: 34%
Laggards: 16%

NFT utility is a buzz word at this point. Everyone uses it and it doesn't mean anything.

So to give meaning back to utility, I present a comprehensive NFT utility framework 🎉

The framework breaks NFT utility down into 6 easy to understand pillars - 🎁🏡🎟🪪🌎🗳

Let's dive in: The NFT utility framework consists of six utility pillars which are the foundation for ALL NFT use cases:

🎁Gifts
🏡Ownership
🎟Access
🪪Verification
🌎Culture
🗳Privilege

Each highlights where NFTs will thrive in the future solving real problems better than Web 2 solutions.

NFT royalties were always going to be a race to the bottom 📉

Based on recent events, #ETH and #SOL marketplaces seem to agree (@sudoswap, @the_x2y2, @MagicEden).

Now, more than ever, we need better monetization models for creators.

So let’s explore a few promising options 🧵 Let’s start with three models and the types of NFTs they work with:

- Harberger taxes -> Pure art
- Subscription NFTs -> Utility NFTs
- Milestone based minting -> NFTs meant to fund dev

And then a fourth royalty avoidance detection AI idea at the end you’ll want to hear about.

I think #ICP will be a top 3 coin.

But to get there, we have a TON of work to do.

Here are the top 20 problems we need to prioritize and solve to build a better future for the #IC

🧵👇 1. Node providers are too centralized

The node provider application process is too long/slow. Once anyone, anywhere can be a node provider, then we will truly have a decentralized worldwide computer.

Based on voting data, the NNS vote on the ICRC-1 token standard was a true #ICP community vote, and it was widely accepted by almost everyone in the community. This means ICRC-1 will be the #ICP fungible token standard for the future.

If you disagree, let's look at the data👇 VOTING DATA

Named Neurons
- ICPMN voted yes (4%)
- Cycle DAO voted yes (6% and follows ICPMN)
- ICDevs voted yes (6%)
- Dfinity voted yes (24%)

Individuals
- Individuals voting yes (7%)
- Individuals voting no (1.8%)

Source: dashboard.internetcomputer.org/proposal/74740

I've worked with over 150 NFT projects over the past year. Throughout this process, I analyzed the utility each project provided to their holders and synthesized it all into a new Utility NFTs Framework 🤓🎉

Let's dive in! 🧵👇 The framework consists of 5 areas of utility, each one building on the next, meaning layers at the bottom are foundational to the ones that come at the top.

5. Transformative Use Cases
4. NFTs You Can Use
3. Benefits to Holders
2. Community Belonging
1. Art & Collectibles
👇

Time for some stats on the sad sad tale of the ICProposalDAO rug from this week

599 unique wallet addresses sent ICP
8 ICP sent on average per wallet
7659.32 ICP stolen in the rug (straight to exchange)
230+ ICP sent by each of the top 5 wallets
1 disheartened ICP community

👇 So what can we do? Well, we can't get the ICP back. But we do still have some options.

1) We could report them to exchanges who could potentially freeze their wallets and/or aid in prosecution. This is straight up fraud and can be prosecuted. Has anyone done this already?