What is Bitcoin Virtual Machine (BVM)?

Bitcoin, the pioneer cryptocurrency, has always stood out for its security and robustness. However, its functionality has been limited compared to other more recent platforms. This is what has led to the creation of the so-called Bitcoin Virtual Machine (BVM), a project that emerges as an innovative solution to broaden the horizon of Bitcoin, allowing it to execute smart contracts and open a new world of possibilities without compromising its essence. Join us to discover how this technology is set to revolutionize the Bitcoin ecosystem.

What is Bitcoin Virtual Machine (BVM)?

Bitcoin Virtual Machine (BVM) is a relatively new concept which seeks to expand the possibilities of Bitcoin without the need for drastic changes to its main network. Imagine a virtual space where programs and smart contracts can be run using Bitcoin, but without overloading the main blockchain. That, in essence, is the BVM.

To understand this better, let's think of the Bitcoin blockchain as a busy highway (Layer 1). Each transaction is like a vehicle that needs to get to its destination. The problem is that the Bitcoin highway is limited in terms of lanes and speed, so by making high demands, we end up with huge queues waiting for vehicles (transactions) to pass (be confirmed). Not only that, but each vehicle has limitations on what can be done with them, as the programmability of the vehicles is limited, due to their dependence on Bitcoin Script.

Well, to solve this problem, the Bitcoin Virtual Machine creates a secondary road (a Layer 2) that connects to the main highway at specific points. This secondary road would allow for more complex operations, such as the execution of smart contracts, without congesting the main highway. Not only that, but everything that happens on this secondary road happens at its own speed, much faster and quicker than the main road, and can even operate with other options such as Lightning Network, to offer even greater speed and infinitely lower usage fees.

A new paradigm for Bitcoin

Robin Linus, a renowned blockchain developer and developer of the Bitcoin Virtual Machine, describes the BVM as a «computer science paradigm for expressing Turing-complete Bitcoin contracts»In simpler terms, this means that the BVM could allow for the creation of much more sophisticated smart contracts than those currently allowed on the Bitcoin network.

To achieve this, the Bitcoin Virtual Machine (BVM) functions as a virtual space parallel to the Bitcoin blockchain where smart contracts are executed and verified. Its operation is based on an ingenious challenge and response system between two participants: the “prover” and the “verifier”, who interact under a pre-established guarantee contract.

Let’s imagine that two people want to execute a smart contract using the BVM. First, both parties set the terms of the contract and encode them in a language that the BVM understands. Then, they deposit a certain amount of Bitcoin into an escrow contract, thus ensuring the commitment of both parties. The “prover” is in charge of executing the smart contract on the BVM and generating a cryptographic proof that proves that the execution was carried out correctly, following the agreed terms.

This proof, which contains information about the contract and its outcome, is sent to the “verifier.” The “verifier,” without actually executing the contract himself, can use the proof and the public information available on the Bitcoin blockchain to check the validity of the execution.

If the proof is valid, the contract is considered fulfilled and the escrow funds are distributed as agreed. In case the “prover” tries to cheat or provide invalid proof, the “verifier” can use that same proof as evidence to claim the contract funds. This verification mechanism and the escrow contract incentivize both parties to act honestly and transparently, ensuring the security and integrity of the system.

Differences between BVM and EVM

Although the BVM and the Ethereum Virtual Machine (EVM) While they share the goal of running smart contracts, their architectures and roles within their respective ecosystems are fundamentally different. The EVM is the beating heart of Ethereum, an integral part of its blockchain that processes every transaction and executes every smart contract directly on-chain. In contrast, the BVM functions as an additional layer, a virtual space parallel to the Bitcoin blockchain. This means that the BVM does not rely on the Bitcoin mainnet consensus to execute contracts, making it potentially more scalable by not burdening the main blockchain.

Another crucial difference lies in the complexity of the interactions they enable. The EVM, with its more mature design, allows for the interaction of multiple parties within a single smart contract, opening up a range of possibilities for complex decentralized applications. The BVM, in its current state, is limited to interaction between two parties, which restricts the complexity of the contracts it can handle.

Finally, their purposes within their ecosystems are divergent. The EVM is the engine of Ethereum, the foundation on which all of its functionality as a platform for smart contracts and decentralized applications is built. The BVM, on the other hand, seeks to expand Bitcoin’s capabilities without modifying its base protocol, maintaining its focus on security and decentralization as a store of value. At its core, the BVM does not aim to turn Bitcoin into a dApp platform like Ethereum, but rather to equip it with tools to execute smart contracts securely and efficiently without compromising its original design.

The potential of the BVM for Bitcoin

The BVM is presented as a gateway to a new universe of possibilities for Bitcoin, despite being in its early stages of development. Its ability to execute more sophisticated smart contracts promises to revolutionize the way we interact with this cryptocurrency. Imagine blockchain games with complex mechanics, decentralized betting platforms, and more robust prediction markets, all built on the strength of Bitcoin thanks to the BVM.

And this is just the beginning. The BVM could also act as a bridge between Bitcoin and other blockchains, facilitating the secure and efficient transfer of digital assets between different networks. As the technology matures and more accessible tools are created, the BVM can be expected to gain wider adoption, driving the development of innovative applications that harness its potential.

Ultimately, the BVM represents a bold step towards a future where Bitcoin transcends its primary function as a store of value. Without compromising the security and decentralization that characterize it, the BVM has the potential to turn Bitcoin into a versatile and powerful platform, a fundamental pillar in the development of decentralized finance.