How does the Bitcoin Virtual Machine work and what are its benefits?

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Bittime - Bitcoin Virtual Machine (BitVM) is a system that allows complex computations and smart contractstobe executed on the Bitcoin network. BitVM is a new breakthrough that can improve the functions and capabilities of Bitcoin as a superior crypto asset. 

However, how does BitVM work and how does it benefit Bitcoin users? Let's look at the explanation in this article.

What is BitVM?

BitVM is an abbreviation of Bitcoin Virtual Machine, which is a system proposed by Robin Linus in a white paper .

BitVM utilizes Taproot technology , a feature that will be activated on the Bitcoin network in November 2021. Taproot allows Bitcoin users to create addresses that can store various types of scripts that can be executed on the Bitcoin network.

BitVM uses these scripts to represent logic gates in a binary circuit which is the form of the program you want to run.

BitVM then makes a commitment to this entire circuit in a Taproot address controlled by the user who wants to run the program. 

In this way, the Taproot address becomes a concise commitment (succinct commitment) to the entire program.

How Does BitVM Run Computing?

BitVM does not perform computations directly on the Bitcoin network, but rather verifies computations carried out outside the network (off-chain). BitVM uses a prover-verifier architecture, where two parties collaborate to run and verify the program. 

The prover is the party who runs the program and notifies the results to the verifier. The verifier is the party who wants to ensure that the results provided by the prover are correct.

If the verifier doubts the results told by the prover, the verifier can trigger a challenge transaction which forces the prover to open the input and output of the particular logic gate in question. 

After several rounds of challenges and responses, false claims can be proven on the Bitcoin network. This approach minimizes the computation and data performed on the Bitcoin network, as the network is only involved in cases of dispute between two parties.

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What are the Benefits of BitVM?

BitVM has several potential benefits, including:

• Enables Turing complete smart contracts on the Bitcoin network without changing the Bitcoin consensus rules
• Reduces Bitcoin network congestion by keeping computing and data off-network
• Allows arbitrary complex computations to be completed on the Bitcoin network between two parties
• Simple commitment to the entire program made possible by the Taproot address
• Two parties can coordinate outside the network, enforced by on-network verification if necessary
• Lower costs than running contracts on the network
• Fraud proof guarantees security - false claims can be proven on the network

BitVM can also be compared to the architecture of Ethereum , which is the largest smart contract platform today. Some of the differences revealed by the BitVM white paper are:

• BitVM verifies computation off-network, while Ethereum executes contracts natively on the network
• BitVM requires more off-network coordination, Ethereum more on-network
• BitVM uses a prover-verifier model with fraud proof, Ethereum uses an executor-payer model with gas fees

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How BitVM Enables Fast Transfers from Ethereum DApps to the Bitcoin Network?

One of the interesting applications of BitVM is the ability to quickly and easily transfer decentralized applications (DApps) built on Ethereum to the Bitcoin network. This is possible because BitVM can compile Solidity programs , which is the programming language used to create smart contracts on Ethereum, into binary circuits that can be run on the Bitcoin network.

Thus, DApp developers do not need to rewrite their code to adapt to the Bitcoin network, but instead only need to use BitVM to convert their code into Bitcoin- compatible binary circuits .

Apart from that, DApp users also do not need to install special software to run DApps on the Bitcoin network, but only need to use a Bitcoin wallet that supports Taproot.

One example of a DApp that has been successfully transferred from Ethereum to Bitcoin using BitVM is Uniswap, a popular token exchange protocol.

By using BitVM, Uniswap can operate on the Bitcoin network with lower fees, higher speeds, and stronger security.

What are the Challenges and Obstacles of BitVM?

Although BitVM has a lot of potential, it also faces several challenges and obstacles that need to be overcome. Some of them are:

• BitVM is still in the development stage and has not been widely tested on the Bitcoin network
• BitVM requires cooperation between the prover and verifier, which may not always be trustworthy or cooperative
• BitVM requires an initial deposit from both parties to activate the contract, which may pose liquidity and volatility risks
• BitVM requires a high level of technical knowledge to understand and use the system
• BitVM may face varying laws and regulations in different countries regarding the use of smart contracts

What is the Future of BitVM?

BitVM is one of the initiatives that shows that Bitcoin is not just a crypto asset, but also a computing platform that can support various types of applications and functions. 

BitVM opens up opportunities for developers and users to leverage Bitcoin's advantages as a secure, stable, and decentralized network, while adding the ability to run complex computations and smart contracts.

BitVM also offers solutions to overcome some of Bitcoin's limitations, such as scalability, flexibility, and interoperability. BitVM can improve the efficiency and effectiveness of the Bitcoin network by keeping computation and data off-network, as well as enabling fast transfers from Ethereum DApps to the Bitcoin network.

However, BitVM also requires further development and testing to prove its feasibility and reliability. BitVM also needs to overcome several challenges and obstacles that it may face, both from a technical, social and legal perspective. BitVM is an ambitious and innovative project, which can take Bitcoin to new heights.

Conclusion

BitVM is a system that allows complex computations and smart contracts to be executed on the Bitcoin network. BitVM uses Taproot technology to make simple commitments to entire programs in a Bitcoin address. 

BitVM verifies off-network computing using a fraud-proof prover-verifier architecture. BitVM has many potential benefits, such as improving Bitcoin's functionality and capabilities, reducing network congestion, enabling fast transfers from Ethereum DApps, and lowering transaction costs. BitVM also faces several challenges and obstacles, such as development and testing, work

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DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.