BitVM is a paradigm that brings smart contract capabilities to Bitcoin by using Bitcoin’s existing scripting language in a novel way. It enables complex computations and contract logic to be executed off-chain, with the results verifiable on-chain through a challenge-response (fraud proof) mechanism. This approach overcomes Bitcoin’s limited scripting capabilities without requiring changes to the Bitcoin protocol.
How Does BitVM Work in Bitlayer?
Bitlayer uses an advanced version called BitVM2 as the foundation for its rollup and bridging technology. Here’s how it works in Bitlayer:
Hybrid Proving System:
Bitlayer combines zero-knowledge validity proofs (for privacy and efficiency) with optimistic fraud proofs (for security).
Layer 2 state transitions are processed off-chain, and a cryptographic proof is generated.
This proof is not directly verified on-chain (since Bitcoin’s scripting is limited), but is presumed valid unless challenged.
Challenge Window:
When a new state root is published, there’s a seven-day window for anyone to challenge its validity.
If someone suspects fraud (e.g., an invalid state root or proof), they can initiate a dispute by posting a deposit.
Dispute Process:
A “challenge game” is triggered, where the challenger must prove the fraud, and the rollup operator must defend the proof’s correctness.
The loser’s deposit is slashed and awarded to the winner, incentivizing honest behavior.
Security Model:
The system only requires one honest and active node to monitor and challenge fraudulent activity, making it highly robust and decentralized.
BitVM Bridge:
Bitlayer’s BitVM Bridge uses this technology to enable trust-minimized BTC bridging, allowing secure and efficient cross-chain Bitcoin transfers.
Why is BitVM Important for Bitlayer?
Enables Turing-complete programmability on Bitcoin without protocol changes.
Inherits Bitcoin’s security by anchoring proofs and disputes to Bitcoin’s base layer.
Reduces costs by avoiding expensive on-chain computation—only challenged proofs are handled on-chain.
Facilitates DeFi and dApps on Bitcoin, unlocking new use cases.
