Bitcoin Virtual Machine, shortly BitVM or BVM, is a blockchain infrastructure that brings complex smart contracts to the Bitcoin Network, thus enabling new use cases for it. The solution was first proposed in the paper “BitVM: Compute Anything on Bitcoin” by developer Robin Linus on October 9, 2023.
Virtual machines in the blockchain are the computational environment where smart contracts are executed and transactions take place. The first blockchain protocol presenting the VM functionality was Ethereum with the Ethereum Virtual Machine or EVM. Each virtual machine may differ in its functionalities, development tools, and compatibility with other networks.
The BVM Network is a Turing-complete system, meaning it supports the development of general-purpose applications expanding Bitcoin's use cases beyond payments. The Network allows for the creation of complex apps and infrastructures like Layer 2 solutions, games, AI applications, DeFi platforms, and more. BVM relies on off-chain computation to allow developers to create smart contracts on the Bitcoin Network without changing the protocol’s consensus rules.
Creating complex smart contracts on Bitcoin was first made possible with the Taproot upgrade. Taproot went live in November 2021 through a soft fork, introducing several features: a new scripting language called Tapscript, optimized transaction speed, and improved privacy by making complex and regular transactions indistinguishable.
However, development on Tapscript is complex and requires large computational resources. The BVM Network, relying on the technologies enabled by Taproot, and improving scalability through off-chain solutions, makes Bitcoin-based development easier, and reduces transaction costs. It also supports Solidity smart contracts, enabling the deployment of Ethereum dapps onto Bitcoin.
On June 27, 2024, the BVM Network released its version 2 upgrade. A major part of this upgrade has been the BVM Bitcoin Zero Knowledge (BVM BitZK) Rollup, allowing developers to build Bitcoin scalability solutions based on Zero-Knowledge proofs.The technology, which has been in active development for the Ethereum blockchain, allows blockchain scaling by batching transactions together and speeding up transactions on the Bitcoin Network, too.
The BVM Network is a Turing-complete system, meaning it supports the development of general-purpose applications expanding Bitcoin's use cases beyond payments. The Network allows for the creation of complex apps and infrastructures like Layer 2 solutions, games, AI applications, DeFi platforms, and more. BVM relies on off-chain computation to allow developers to create smart contracts on the Bitcoin Network without changing the protocol’s consensus rules.
Creating complex smart contracts on Bitcoin was first made possible with the Taproot upgrade. Taproot went live in November 2021 through a soft fork, introducing several features: a new scripting language called Tapscript, optimized transaction speed, and improved privacy by making complex and regular transactions indistinguishable.
However, development on Tapscript is complex and requires large computational resources. The BVM Network, relying on the technologies enabled by Taproot, and improving scalability through off-chain solutions, makes Bitcoin-based development easier, and reduces transaction costs. It also supports Solidity smart contracts, enabling the deployment of Ethereum dapps onto Bitcoin.
On June 27, 2024, the BVM Network released its version 2 upgrade. A major part of this upgrade has been the BVM Bitcoin Zero Knowledge (BVM BitZK) Rollup, allowing developers to build Bitcoin scalability solutions based on Zero-Knowledge proofs.The technology, which has been in active development for the Ethereum blockchain, allows blockchain scaling by batching transactions together and speeding up transactions on the Bitcoin Network, too.
The BVM Token
The BVM Network has its native cryptocurrency BVM, which is primarily used for payments, staking, and governance. BVM has a total supply of 100 M tokens, 15% of which was allocated to the public sale held from January 30 to February 6, 2024. During the round, BVM raised over $3M from 2,717 contributors.
20% of the BVM tokens were allocated to the core team and developers, 50% to the community, 5% to advisors, and 10% to liquidity. At the time of writing, BVM trades at around $0.7 and has a market cap of around $17 million along with a circulating supply of over 23.5 million.
BVM Tokenomics. Source: bvm.network
Current Limitations of the BVM Network
Bitcoin was created as a P2P electronic cash system launched without smart contract support. However, solutions like Taproot and the BVM Network have been created to enable the development on Bitcoin and expand its technological use cases beyond empowering financial transactions.
Currently, BVM does not support as much functionality as the Ethereum Virtual Machine because it’s a more recent system with fewer tools and projects developed to support its growth. According to the project's whitepaper, the BVM Network’s major constraint is its two-party verification system, where computations occur only between a prover and a verifier, unlike multi-party smart contracts that allow for complex agreements such as DAOs. The team mentions that further research and development will address the existing limitations.
Anahit Avetisyan
Author
Web3 writer and crypto HODLer with a keen interest in market trends and recent technologies.
