BitVM Technology Optimization: Enhancing Bitcoin Scalability and Programming Capability

1. Introduction

Bitcoin, as a decentralized digital asset, has some limitations that make it difficult to support complex applications and large-scale payment networks. To address this issue, various scalability solutions have been proposed in the industry, such as state channels, sidechains, and client validation. Recently, the introduction of BitVM technology has provided a new scalability approach for Bitcoin, enabling the realization of Turing complete smart contracts without altering Bitcoin's consensus.

BitVM cleverly utilizes Bitcoin scripts and Taproot technology to achieve a mechanism similar to optimistic Rollups. It uses Lamport signatures to establish associations between UTXOs, thereby enabling stateful Bitcoin scripts. By committing large programs in Taproot addresses, BitVM can perform complex off-chain computations while keeping the on-chain footprint minimal.

However, the BitVM technology is still in its early stages and has some issues regarding efficiency and security. This article will explore several optimization directions to further improve the performance and usability of BitVM.

2. BitVM Principle

BitVM is an off-chain contract solution designed to extend the contract capabilities of Bitcoin. It achieves the statefulness of Bitcoin scripts through Lamport one-time signatures, allowing different scripts to share the same variable values. The core components of BitVM include:

1. Circuit Commitment: Compile the program into a binary circuit and make a commitment in the Taproot address.

2. Challenge and Response: Pre-sign a series of transactions to implement the challenge-response mechanism, which can be executed off-chain or on-chain.

3. Ambiguous Penalty: If the prover makes an incorrect statement, the verifier can obtain the prover's deposit by successfully challenging.

3. BitVM Optimization Direction

3.1 Reducing OP interaction times based on ZK

By introducing zero-knowledge proof technology, the number of challenges in BitVM can be significantly reduced, thereby improving efficiency. The verification algorithm complexity of zero-knowledge proofs is fixed, which has a lower computational complexity compared to the binary method of the original algorithm. This approach can shorten the challenge cycle and reduce transaction fee costs.

In the future, we can explore the combination of zero-knowledge proofs and fraud proofs to build ZK Fraud Proofs, achieving an On-Demand ZK Proof model. This model generates ZK Proofs only when there is a challenge, which can further optimize the use of computational resources.

3.2 Bitcoin friendly one-time signature

Lamport signatures are a fundamental component of BitVM, but their public key and signature lengths are relatively long, consuming a lot of storage space. The Winternitz one-time signature scheme could be considered, as it can significantly reduce the lengths of signatures and public keys, although it will increase some computational complexity.

Using the optimized Winternitz one-time signature in BitVM can reduce the bit commitment size by about 50%, significantly lowering transaction costs. In the future, more compact one-time signature schemes can be explored to further optimize the performance of BitVM.

3.3 Bitcoin-friendly hash function

The current Bitcoin network does not support the OP_CAT operation, making it impossible to directly concatenate strings to verify the Merkle path. Therefore, it is necessary to design an optimized hash function based on the existing Bitcoin script to support the merkle inclusion proof verification functionality.

The BLAKE3 hash function is a potential candidate. It divides the input into fixed-size chunks and processes them using a compression function. By optimizing the implementation of the BLAKE3 algorithm in Bitcoin scripts, it is possible to significantly reduce the on-chain data volume and computational complexity.

3.4 Scriptless Scripts BitVM

Scriptless Scripts is a method for executing smart contracts off-chain using Schnorr signatures. It features powerful functionality, good privacy, and high efficiency. Introducing Scriptless Scripts technology into BitVM can further reduce on-chain data volume and lower transaction fees.

By using Schnorr multi-signatures and adapter signatures, it is possible to implement logic gate commitments in the BitVM circuit without providing hash values and pre-images. This approach can significantly save BitVM script space and improve overall efficiency.

3.5 permissionless multi-party challenges

Currently, BitVM uses a permissioned two-party challenge model, which has potential security risks. To enhance system security, a permissionless multi-party OP challenge protocol can be designed, expanding BitVM's trust model from 1-of-n to 1-of-N (where N is much larger than n).

When implementing permissionless multi-party challenges, the following issues need to be addressed:

1. Witch Attack: Design a dispute resolution algorithm that causes the cost of honest participants winning the dispute to grow logarithmically with the number of opponents.

2. Delay Attack: Require challengers to stake in advance and design mechanisms to limit the impact range of delay attacks.

4. Conclusion

BitVM technology provides new possibilities for Bitcoin scalability and smart contract implementation. Through the exploration and practice of the aforementioned optimization directions, it is expected to further enhance the performance and security of BitVM, contributing to the prosperity of the Bitcoin ecosystem. More research and experimentation will be needed in the future to fully realize the potential of BitVM.