‍Bitcoin Enters Ethereum’s ZK Arena

Transcript

Good afternoon everyone. I'm Idanago. Um for the last 14 years I've been working on a what frequently has been an unpopular uh mission which has been to bring greater scalability and functionality to Bitcoin and allow Bitcoin to be a um fully programmable system. The reason I was interested in this is because I would like as someone who holds Bitcoin to be able to use my Bitcoin without going through intermediaries. I also would like to make sure that Bitcoin is futurep proofed and is able to adapt and adopt to new technologies over time. Now,

weirdly enough, to me at least, this has been an extremely unpopular uh idea. It's been unpopular from the perspective of people outside of Bitcoin because they've said, well, you know, um, Bitcoin can't do these things. And in fact, our livelihood depends on the fact that Bitcoin can't do these things because it allows us to launch systems which can. And it's been unpopular, weirdly enough, inside of Bitcoin because people have, especially over um the last seven years since the the block size wars in Bitcoin, sort of been held in a Stockholm syndrome uh or a maxi syndrome where they've been held hostage by the limitations of Bitcoin and have become so used to the

limitations of Bitcoin that like hostages in a in a in a Stockholm syndrome situation, they've come to identify with those limitations and even begin to worship uh those limitations and see them as as crucial, important, valuable etc. Uh despite that um there's been always a group of people who have believed uh that we have been perhaps underestimating the importance of Bitcoin because we've also been underestimating the importance of network effects in our industry. Effectively what we're

building are networks of assets and networks of money. Now networks obviously have network effects but this is um uh uh uh uh compounded by the fact that money has a network effect that liquidity has a network effect and that developer ecosystems have network effects as well. So it has always been my belief that what we would end up with is a relatively small number of networks in a winner takes most environment and that we were heading towards that kind of consolidation and that further the primary thing that was holding us back from getting to that point was the limitations of Bitcoin which created an

artificial situation where Bitcoin itself couldn't fully express its network effects and as a felt we had a industry which was built on a constant process of greater and greater fragmentation more chains more confusing UIs more ways in which liquidity user bases and tribalism got broken up. So for 14 years we've been working on this but the big opportunity for us right and and and sort of the ways that we had been working on this just just to give you guys a bit of a sense of who I am um one of the the the the ways in which I'd been working on this was

trying to build Bitcoin more deeply into the financial um payments rails so the payments rails themselves could become more decentralized um to do that I started a company called Epipite um Epipite became one of the first companies to do significant crossber transactions and remittance settling in bitcoin and among other things um the first I uh sort of versions of lightning network were invented inside of epified. Later I started um a project called Sovereign which became the largest DeFi platform for Bitcoin but still within the limitations that Bitcoin had at the time. And then Taproot introduced new types of cryptography that we could use

with Bitcoin in 2021. And uh myself and a small number of other researchers became convinced um that the next big leap for Bitcoin was opened up already back then because Taper opened up the opportunity the possibility for us to introduce ZK verification uh into Bitcoin. And the reason we thought that this was so important um I will be mostly talking about in this talk but I'll summarize it in one very very simple idea which is that for the last 10 years we've lived in a paradigm where the way we've built um additional

expressibility programmability applications into blockchains has been by taking everything the entire software stack the VM the uh uh the the data and all of the computations and shoving them into the blockchain itself. And then every single node and every single validator or verifier needs to rerun every single verification that the system produces. And we have discovered although I think it was obvious from first principles that this would not scale right we've seen the struggles that Ethereum has had with scaling. We've seen the struggle that Solana has had with scaling. We've seen the trouble that every single system that uses this paradigm has had with

scaling. Um and that kind of system exists to produce smart contracts which are basically verifiable compute via redundancy. Everyone reruns the program, you get enough redundancy, you can make sure that the program is run correctly. But what ZK introduced is the opportunity to have verification via cryptography. perhaps a single machine could prove that it had correctly run the program in such a way that would not require everyone else to redundantly uh rerun it. So that was the the big idea that we thought was going to change everything and we think right now we can

start seeing the early phases of it changing everything. But what we had been working on was can we work within the limitations of Bitcoin which are extremely uncomfortable. If anyone's ever tried to build on Bitcoin, it is um it is an extremely punishing system, right? It is not a a system which is designed to make it easy to build on. Can we get a system uh where we could build a ZK verifier using the existing op codes on Bitcoin, using the existing stack limitations, using the existing data limitations, etc., etc., etc.

Towards the uh uh end of 2023, we thought we had cracked the code. In April, we published a paper called Bitnark and Grail. And then last year for the first time ever in block 853626 we were able to demonstrate on Bitcoin mainet the first ZK verification that had been performed. And the way that we did this I think is quite interesting. I'll mention it very briefly which is that we basically created the ability to utilize fraud proofs with ZK to allow for ZK verification to be done on Bitcoin mainet using Bitcoin up codes.

So that was great. But what we had learned in the course of building this was really really compelling. We had discovered that this might be far more interesting and far more flexible than what we had initially anticipated which was that we would initially our expectation was that this was going to allow us to build rollups on Bitcoin. Um, and over the last year, what we've seen is a very large number of ecosystems as well as developers sort of working on their own beginning to take more of an interest and begin working on our system in ways which we didn't initially anticipate.

And what has emerged perhaps as the most exciting aspect of this is not um the ability necessarily to just build roll-ups on Bitcoin or even the ability to utilize ZK bridging to bridge BTC in a highly trust minimized effectively trustless for those who are operating the system uh way. But the ability to rethink how we think about computation, how we think about smart contracts and how we think about tokens more generally in a way which I think is extremely interesting and applicable to the entire crypto space. So um looking at this right if you think about the way we think about smart contracts and by extension tokens which are all created by smart contracts today

you have a monolithic system right you have an instruction set you have a hardcoded VM and you have the pulled asset so think about when you're just creating even the simplest smart contract that smart contract is the instruction set which generates the tokens and it is also the system which manages the registry of tokens and the transactions of the tokens all within that system and as a result it is extremely inflexible and hardcoded to whichever chain it exists on now we've been hearing about modularity in the crypto space for a long time now but what Bitcoin has effectively forced us because of its limitations to do is to

think about perhaps take modularity to its um to its limit right to it its logical conclusion which is that the the the very programs themselves can be modularized. The instruction set can sit anywhere on a computer perhaps not even um uh written right not written on some computer on a single device not even uh uh on the blockchain so long as everyone has access to that instruction set when they are interacting with it. So it could exist for example in GitHub. Um you can abstract away the necessity to have any specific VM by allowing developers to build in Rust or in C++ or

solidity or whatever it is they choose any risk zero or was system by encoding everything as a ZK proof via a ZKVM. And you can as a result create assets that don't exist on a specific chain but exist as specific ZK proofs, tiny little proofs representing the token itself. And all of the history of that token being represented by the fact that the proof is recursive and that the inputs um themselves represent the the smart contracts that that allows. And this created a new paradigm of us thinking about both smart contracts and tokens which we today call charms which allows us to turn Bitcoin into a

general purpose ledger. But perhaps what has been most exciting to people is the fact that it allows us to issue or or rather to allow developers and users to issue tokens where with a simple proof they themselves without going through any third-party bridge can um um uh port those tokens to a different execution environment to a different chain. And so it's actually really cool to me that um up here a moment ago was Starkware talking about something very interesting and exciting. This idea that you could have a rollup that sits between the worlds of Ethereum and Bitcoin. But I

would effectively suggest that we are here on the other side of that and suggesting that perhaps instead of thinking about entire chains as roll-ups, we should be thinking about every single asset, every single intent as effectively its own rollup. And what that does is it creates a world which looks a lot more like the internet. One of the things that made the internet so successful was its absolute dumb simplicity. All data regardless of what it is going to be used for or how it you know is constructed is shared across the internet using standardized packets internet packets. Right? So we've we've we've sort of modularized the internet

uh into this this this very fine grain of tiny little packets which only uh contain small components the minimum components of uh that that are required to be transported. Well, what are we building? Sometimes I think our language confuses us. We sometimes think of ourselves as the blockchain industry, but no one really wants a blockchain. What we are actually focused on in our industry is assets, is property, and is the proof that allows us to own or transact in those. In other words, we are an industry focused around crypto. We're an industry focused around proofs. And by constructing a system where the tokens themselves, the intents

themselves, the transaction themselves are all demonstrated via proofs. We remove abstract away the question of are you on a chain or are you not on a chain? What kind of chain are you on? Are you on a count-based chain or a UTXO chain? and allow for things like tokens which can move from one chain to another and continue to interact with the same smart contract which could even be on a on a third chain without the need for bridging. Now, we were sort of led here because of the um of the because the fact that Bitcoin is a harsh mistress because it is so limited that anything that we

could construct for Bitcoin by default would then work for other systems as well. And our goal was to build a system where, you know, the world's most trusted ledger would be able to have real world assets issued on it or um be utilized for uh uh um proving the most important pieces of data or um building a system which was flexible enough that a company would be able to build using Unity, right? uh uh and C++ and running a game on their own computer on on their own servers but still be able to prove the the the key components of the properties assets uh loot drops to a chain like like Bitcoin. And so

effectively our goal was to turn Bitcoin into the ultimate trust anchor for different assets on Bitcoin. But what we've discovered um is that uh the the primary users, the people who are most interested in working with us are actually um developers who are building other ecosystems themselves, right? Uh chains like Litecoin and Cardano in the UTXO world, Suie, Tron, BSC, uh Arbitum, uh outside of it are recognizing that two things become possible now. one is the ability to gain trustless access to BTC uh in their own environments but also by

integrating into a system for the first time we have a trust anchor not just for assets but for chains themselves in other words Cardano can now interact with for example Litecoin and and I I use those two as examples because we've been focused primarily on the UTXO chains initially as they those are the easiest ones for us to integrate through Bitcoin. In other words, um Bitcoin can become a single trust anchor in a way which is very very different, right? Where where for example in the talk before us, Stock were suggesting let's have a rollup which is sort of split between worlds and is trying to have trust anchors into Ethereum and Bitcoin. What we're suggesting is that a

more cohesive way of working for the entire crypto space is for us to have a credibly neutral system which we all agree to use as a central uh uh provider of security and that by default that is Bitcoin and that because that is so valuable to do naturally that is where we expect the industry to go and we're glad that we can help provide technologies that make that possible. And what we think that that does is it takes us from a world where for the last 15 years we've been talking about building an internet of value and effectively failing and instead of that building many many many chains that compete with each other but

because of that can't truly compete with the internet into a world where we can start talking about an internet with value where Bitcoin and by extension the rest of crypto become just another pillar of the existing internet interoperable not just with themselves but with everything that we think of as web 2 and people are starting to talk about as web 2.5. So um I started this journey um because I believed uh in the power of network effects and the ability to utilize Bitcoin to to to build a more decentralized world. What I've discovered is that probably the

path to there goes through the integration of all of the infrastructure and chains that we've built with each other and that possibly one of the most important roles that Bitcoin can play is by unifying the rest of the world of crypto. So thank you very much uh and I will with whatever time I have left happily take any questions. Thank you. [Applause] Uh you sir and then you. Yes. Yes, please. Hi. Um, so are you saying that ultimately Ethereum should become a Bitcoin rollup?

I think bit Ethereum always wanted to be a a Bitcoin rollup because um and and why do I say that? Ethereum's founder started in Bitcoin. Uh created Ethereum as a way to try and achieve what he hoped Bitcoin could become but felt like Bitcoin didn't have the uh tools to to achieve and ultimately the the goal that I think Ethereum and Bitcoin and really people who are in this space less for the Ponzi and more for the for for for the sort of ideolog ideological aspects.

What we would like to do is build a world of concrete property rights that are borderless and can be transacted by everyone. So I know you are being a bit facicious by saying Ethereum as as a Bitcoin rollup. I I I think what we should look towards is a world in which these systems are deeply integrated. And I think if we ask ourselves does it really matter which system becomes the sort of um default layer of trust? It doesn't really matter. Um I just personally for multiple reasons which I'm happy to discuss think um Bitcoin is the most likely but I think one of those I already mentioned which is network effects. Thank you. Yes sir.

I think they want you on camera uh or at least in the in the audio. Okay. Uh thank you. I have a question related to the uh scalability of Bitcoin. If you feel that Bitcoin is going to be the substrate of trust in the new world as the internet is for data and the digital econ the economy of of information. Yeah. I would like to understand the the bottleneck in terms of how many proofs you can put on a single uh block etc. I mean it seems that we are not yet uh so so the proofs that we work with are extremely small 300 bytes they represent almost no weight at all. However, usually almost invariably they require

additional inputs and and and that requires additional data. So typically for um transactions or applications on Bitcoin, we're looking at something like 2 to9 kilobytes, right? Which is roughly on the order of a standard or a slightly small a slightly large Bitcoin transaction. But Bitcoin itself is extremely limited, right? So Bitcoin itself only gives you four megabytes of effective space every 10 minutes. So where do we go from here? I think that two things are going to happen. One is that Bitcoin block space itself is going to become extremely valuable and extremely scarce, possibly the most sort of limited digital resource the world

has. Second, I think we're going to see a significant emphasis on proof aggregation and uh a and being able to utilize that space in that way. What I think is going to be sad for most Bitcoiners and that you know will include me I suppose as well is that I think the implication is that Bitcoin mainchain as we think of it as a thing that people regular people like you and I transact on will eventually become a thing of the past. Bitcoin itself will become a settlement mechanism. um and almost um invariably everything that settles to Bitcoin will actually be um an aggregation of multiple other

transactions. All right. Thank you. Thank you very much everyone. [Applause] [Music] You can still ask some question outside if you want.