Bitlayer: Building the Bitcoin Computational Layer

Original source: Bitlayer

The Renaissance of Bitcoin’s Construction Culture

Bitcoin is undergoing a huge transformation.

And it is less than 50 days away from the next round of Bitcoin halving…

Due to the debate and controversy caused by the Ordinals protocol, the rapidly growing number of inscriptions, and the gradual formation of a community culture around Bitcoin NFTs, some community members are beginning to worry about the split of the Bitcoin community, especially Bitcoin fundamentalists.

We need to have a deeper understanding of the changes that are happening in Bitcoin, rather than standing still. New concepts or things such as inscriptions, Ordinals, BRC-20, NFT, DeFi, Layer 2, etc. herald a paradigm shift in Bitcoin itself, and Bitcoin is moving towards building more applications on top of one layer.

Another important signal comes from outside Bitcoin: the US SEC approved Bitcoin ETFs, and then mainstream traditional financial companies launched related assets one after another. The latest data shows that on March 6, investors generated a single-day Bitcoin spot ETF trading volume of up to 10 billion USD through 10 institutions including Grayscale, ARK 21Shares, Franklin Templeton, and Fidelity. This shows the huge demand of global investors for trading Bitcoin ETFs.

The abundance of Bitcoin-related applications and ecological facilities, coupled with the acceptance of the mainstream financial market, have given Bitcoin new meaning. Specifically:

As block rewards decrease, the substantial increase in Bitcoin network transaction fees ensures miners’ income and strengthens their motivation to continue to maintain the security of the Bitcoin network

Buyers who were previously blocked by regulatory policies have flooded into the market, constituting a strong source of purchasing power

More and more applications are built on Bitcoin L2, and even on future L3 and L4 protocols

New use cases such as blockchain games, DeFi, and NFTs will attract more Bitcoin buyers and consumers

And more Bitcoin native applications or potential innovations are yet to be discovered…

Despite the opposition in the community, it is undeniable that the Bitcoin ecosystem has quietly changed; many Bitcoin Layer2 projects will also reshape Bitcoin at lightning speed.

Since the launch of Bitcoin, the development of the entire Bitcoin ecosystem has not been smooth. Although the SegWit and Taproot upgrades have improved Bitcoin's transaction efficiency, privacy and functionality to a certain extent, Bitcoin's technical limitations still exist, resulting in the Bitcoin ecosystem being far less active than public chains such as Solana and Ethereum.

Bitcoin developers have been exploring Bitcoin expansion solutions.

The Lightning Network is committed to bringing faster payment speeds to Bitcoin, but it cannot break through the programming limitations of Bitcoin itself; Stacks has introduced programmable and decentralized computing to Bitcoin, but more security upgrades and iterations are still needed to build a foundation for bringing more users into the Bitcoin ecosystem.

Users hope that a better Bitcoin Layer 2 solution will emerge: one that can inherit Bitcoin security and provide the scalability advantages of other public chains, such as high throughput and low cost, without increasing the risk of centralization.

The emergence of BitVM has pointed us in a direction that can meet the above requirements and can be implemented.

Robin Linus, head of ZeroSync, mentioned in the BitVMwhite paper that BitVM can verify any off-chain calculation on Bitcoin without making any changes to the consensus rules of the Bitcoin network. BitVM provides an optimal solution for users and developers, and also provides Bitcoin Layer2 solution design with Bitcoin security equivalence, high scalability, and the possibility of seamless connection with the base layer.

"As a long-term follower and builder of Bitcoin, the emergence of BitVM has given us the opportunity to elevate Bitcoin beyond the ability to store simple static value, and to build a Layer 2 ecosystem with strong vitality based on Bitcoin." Bitlayer co-founder Charlie Hu said.

Bitlayer is a Bitcoin Layer 2 project based on the BitVM concept, with the goal of unlocking the potential of Bitcoin to the greatest extent.

Bitlayer's Vision

As the first Layer 2 that is equivalent to Bitcoin in security and Turing complete, and the first Layer 2 based on BitVM, Bitlayer is committed to becoming the computing layer of Bitcoin.

"Bitlayer can be seen as a powerful smart contract system built on top of Bitcoin. Our goal is to bring programmable, decentralized computing capabilities similar to Ethereum to Bitcoin, while providing a more economical and faster on-chain application experience, and all of this is done under the equivalent security of Bitcoin Layer." said co-founder Kevin He.

Bitlayer's development space will be based on Bitcoin's existing hundreds of millions of user bases and the growing addressable market size, while the excellent design of the project itself depends on the team's capabilities. The core builders of Bitlayer come from well-known platforms and projects such as Huobi, Polygon and Polkadot. Among them, co-founder Kevin He served as the head of Web3 technology at Huobi Group and has rich practical experience in underlying public chains and application projects.

Bitlayer's development goals and ideas are a powerful complement to the broader Bitcoin ecosystem. Bitlayer's technical solutions do not require Bitcoin protocol changes, upgrades or optimizations, so Bitcoin will not be fundamentally changed. This means that Bitcoin can maintain its original functions and roles, and Bitcoin fundamentalists can continue to stick to their ideas.

On this basis, Bitlayer transforms Bitcoin from traditional digital gold to a productive asset by unlocking and expanding new use cases. As the cornerstone of a decentralized economy, the value of Bitcoin will also grow over time. For Bitcoin holders, they will also capture and enjoy the value brought by decentralized applications including NFTs, DeFi, blockchain games and DePIN.

Is Bitlayer an important builder of the Bitcoin ecosystem?

The value of BitVM is being recognized by more and more developers, and many teams are constantly promoting the implementation and application of BitVM.

The core of Bitcoin Layer 2 is to solve the trade-off between security and Turing completeness. Bitlayer's technical design concept is inspired by BitVM, DLC/LN technical protocols and various VMs (including EVM), and three core goals are abstracted from them:

- Realize trustless entry and exit of Layer 1 assets

- Realize the state transfer of Layer 2 Turing-complete virtual machines

- Realize Layer 1 to verify the validity of Layer 2 state transfer

The security of cross-chain bridge assets is an important indicator for evaluating Layer 2 projects, and the core is the choice of asset control method.

At present, the commonly used solution in the industry is for the Layer 2 platform to set up a multi-signature account based on MPC-TSS (Secure Multi-Party Computation and Threshold Signature) technology or Schnorr signature, that is, the user transfers the assets to the multi-signature account controlled by the platform. This traditional solution makes the user completely lose control of the assets, and the platform's multi-signature management capabilities will significantly affect the security of assets, especially after some extreme cases, users are no longer satisfied with this type of multi-signature solution. We believe that the two-party game model such as DLC/BitVM will be a better direction: based on the asset security model built by DLC/BitVM, users will retain partial control of their assets and are expected to achieve asset security escape.

The verification of Layer 2 state transfer is a way to prove one's innocence. In theory, the network based on which the state verification is performed determines the security level of the Layer 2 network. Bitcoin is the most secure network that has been verified for a long time. The verification based on the Bitcoin layer will enable Bitlayer to inherit Bitcoin security and achieve Bitcoin security equivalence. The introduction of BitVM breaks the traditional view that complex calculations cannot be performed on Bitcoin, and provides the possibility for Bitlayer to implement Layer 2 state verification on Bitcoin.

By building an ecosystem based on BitVM, Bitlayer hopes to attract more users and developers to participate in the ecosystem construction.

In order to allow existing Ethereum ecosystem applications and developers to migrate to Bitlayer at a low cost, without deep modification or rewriting, Bitlayer will be compatible with EVM, which is also the best choice for the cold start of new projects. In addition, multi-VM compatibility will bring excellent DX/UX. We plan to expand more ecosystems and allow users on the Bitcoin chain to access more native applications.

The above is Bitlayer's initial concept. Next, the team will officially release a white paper to disclose key information such as Bitlayer's underlying technical architecture and economic model design, as well as our thoughts on important technical solutions such as the Layer 2 state commitment challenge protocol based on BitVM and the two-way message/asset protocol based on DLC/BitVM.

The History of Creating Bitcoin

Since its inception, Bitcoin has evolved from being an electronic cash, a peer-to-peer payment network, to being regarded as digital gold, and then to an evolution of non-mainstream financial assets, and its global influence has continued to expand; the open source nature of Bitcoin software and the decentralized autonomous community characteristics have also fostered an experimental culture, which has also limited the prosperity and development of the Bitcoin ecosystem to a certain extent.

With the viral spread and popularity of new things such as inscriptions, Bitcoin NFTs, and Memes, as well as the rise of the "Build on Bitcoin" culture, Bitcoin has also reached a critical node and demonstrated strong community vitality and the potential to surpass the Ethereum ecosystem.

Of course, it will take some time for the Bitcoin ecosystem to explode, including the implementation of BitVM and cross-chain security.

Bitlayer is an early disseminator of BitVM's technical concepts and visions. Under our advocacy, the BitVM community has gathered a group of enthusiasts and researchers. In the future, we will continue to pay attention to the latest progress of BitVM and promote the implementation of BitVM.

Bitlayer is also a pioneer in the practice of BitVM. By building an excellent new protocol based on BitVM, Bitlayer hopes to introduce more use cases into the Bitcoin ecosystem and release the potential value of Bitcoin. Leverage the security of Bitcoin to build an open future that we all hope for.

The core mission of the Bitlayer team is to solve the trade-off between Bitcoin security equivalence and Turing completeness. The essence of the problem is to meet the challenge of Bitcoin scalability. On the basis of ensuring the security level of Bitcoin Layer 2 and the applications it supports, attract more users to the Bitcoin ecosystem and ultimately expand Bitcoin adoption.

While public chain ecosystems such as Ethereum and Solana are booming, the view of Bitcoin ecosystem construction has been marginalized, but this situation may change soon.

As the Bitcoin halving event approaches, and the block reward reduction is imminent, building Layer2 based on Bitcoin is of strategic significance. This is not only to motivate miners to continue to maintain network security by relying on the transaction fees generated by Layer 2, but also a paradigm shift in Bitcoin's practicality, becoming the cornerstone for the construction of massive Web3 applications in the future.

Satoshi Nakamoto once predicted: "In the future, as block rewards decrease, transaction fees will become the main source of income for Bitcoin nodes."

Now, we are at the historical node of the fourth Bitcoin halving, and the explosive growth of the Bitcoin ecosystem seems to confirm Satoshi Nakamoto's vision. As a key participant in the Bitcoin ecosystem, Bitlayer is committed to becoming the computing layer of Bitcoin, creating a sustainable and vibrant ecosystem, continuously releasing Bitcoin's potential, and opening a new era of prosperous digital economy.

Bitlayer official website: https://www.bitlayer.org/