Latest crypto news: smart contracts on bitcoin on the way after BitVM whitepaper launch

The latest crypto news talks about the possibility of smart contracts on bitcoin finally being introduced after ZeroSync’s Robin Linus presented a whitepaper entitled ‘BitVM: Compute Anything on Bitcoin’, which explores this new frontier.

It is a new paradigm that experiments with the role of bitcoin as a settlement layer for off-chain verification of certain transactions, effectively making the decentralised network a virtual machine in its own right.

Although it is a powerful innovation, the limitations of this new cryptographic concept should not be underestimated, as they could prevent it from being truly adopted worldwide.

Indeed, a fierce debate has opened up within the crypto enthusiast community, pitting BitVM supporters against fans of Ethereum and other cutting-edge blockchains.

Let’s take a look at the details in the news.

Crypto news: BitVM white paper unveiled, a new paradigm to introduce smart contracts on bitcoin

The latest news from the crypto world concerns the recent publication of the whitepaper “BitVM: Compute Anything on Bitcoin” by Robin Linus, Bitcoin developer and co-founder of the ZeroSync project.

It is a document that proposes to the public of bitcoiners a new set of rules that would allow the execution time of a given operation to be divided over several transactions, thus effectively implementing smart contracts on the cryptographic network.

In fact, the aim of BitVM is to make any function potentially computable on Bitcoin, through an off-chain verification process, similar to what happens with rollups on Ethereum.

With this stratagem, which does not require soft or hard forks and thus avoids unnecessary debates within the crypto community, Bitcoin can be elevated to a “Turing Complete” blockchain, as opposed to its current “NOT Turing Complete” status, which was explicitly desired by Satoshi Nakamoto at the beginning of its invention.

This is possible thanks to the November 2021 implementation of Taporoot, which allows a variety of execution paths to be handled without having to change the consensus mechanisms that underpin Bitcoin.

The BitVM mechanism explained in the white paper is very simple: Bitcoin is used as a “settlement layer” (as is the case in Ethereum with layer-2 rollups) by handling some of the off-chain cryptographic proofs on other P2P channels.

In this way, it would be possible to perform a whole range of operations on bitcoin that are currently impossible due to the excessive computational cost.

This is similar to how the Lighting Network, layer 2 for bitcoin’s scalability, works, where microtransactions are handled between two closed channels and only a small fraction of the transactions are recorded on the main bitcoin chain. 

Commenting on the news of the BitVM whitepaper presentation, cryptography expert Sam Parker described as a success the ability to increase the length of programs that can be run on Bitcoin.

According to him, this means being able to remove a trust component from some existing services in the bitcoin ecosystem. These are his words

“Eliminate all types of trusted or semi-trusted escrow services […] congestion control/coinjoin aggregators, quorum sidechain, some types of Oracle DLC type content can go from trusted/semi-trusted to 100% trustless”

Robin Linus, the creator of the BitVM idea, is even more enthusiastic and believes this is the most exciting discovery in the history of bitcoin scripting. He quotes verbatim

“It seems to break down virtually every door, giving us access to pacts, sidechains and powers similar to Liquid or EVM, all at once, without the need to fork. I can’t wait to release my demo.”

Will Bitcoin ever surpass Ethereum as a platform for decentralised applications? 

Following the release of BitVM’s white paper, which for the first time in the history of crypto opens up the possibility of implementing smart contracts on Bitcoin in the future, a lengthy debate has begun among the community of industry enthusiasts to discuss the hot spots of this innovation.

The first thought in this regard concerns the possibility that Bitcoin could take over Ethereum’s role as a launch pad for smart contracts and decentralised application development.

This would elevate the Bitcoin network to an “altcoin killer” infrastructure where the rest of the crypto market would no longer make sense. While the novelty of BitVM seems to be a ‘game changer’ for the future of the decentralised network, it should be noted that in reality there are still many limitations.

First of all, before looking in detail at the obstacles of the new cryptographic approach, it is important to remember that what BitVM does in BitVM is nothing more than dividing the runtime of a transaction into multiple transactions. No more, no less.

This is not really a revolution, but an intelligent application of the capabilities introduced with Taproot two years ago.

In terms of technical limitations, there are those who point to problems with the cost of validation at the bitcoin settlement layer and the slowness of the infrastructure, which makes Ethereum’s EVM world much more efficient.

Moreover, the interaction between two channels, as happens in LN, makes it impossible to achieve future implementations of routing and more complex operations that already take place on some latest-generation blockchains.

In addition, there are a number of barriers related to the difficulty of using this whole world, which is currently only known to most people.

Bitcoin veterans may also disagree with the ideas introduced by Robin Linus, but it must be acknowledged that this is an opt-in implementation, in the sense that one is not obliged to commit one’s coins to a full Turing contract, as one is not faced with the choice of forking.

At the moment, the challenges for BitVM, which were not mentioned in Robin’s whitepaper, are many and must be seen in the context of Bitcoin’s original architecture, which can never match Ethereum’s in terms of efficiency.

In any case, it is worth remembering that we are at the beginning of a new experiment that will reach its full potential in the coming years.

It is not certain that everything that BitVM will bring will be obsolete for the universe of the most scalable and fastest blockchains, since Bitcoin represents the most SECURE and DECENTRALISED cryptographic network in the world, and this in itself gives it a competitive advantage.

The cooperation between distant universes and the choice of developers to implement an idea on a faster infrastructure (Ethereum) or a more secure one (Bitcoin) will be what is likely to lead to the survival and success of the same idea applied to different contexts.