Bitcoin's once-vaunted scaling innovations may actually be far more limited than early proponents once claimed, developers say.
Since its introduction in October, BitVM, a “computing paradigm” that represents smart contracts on top of Bitcoin, has been touted as a potential way to bridge BTC to other blockchains in a truly decentralized manner. This could open up a world of applications to BTC holders that are currently dominated by other chains, such as privacy, scalability, and dApps.
But such a bridge would introduce important limitations that critics say have hitherto elusive to proponents of the technology.
“BitVM Bridge is inherently economically unstable.” I have written Bitcoin developer Tyler Whittle said on Twitter on Friday.
“Unlike other bridge designs, where users deposit funds into an escrow managed by the bridge operator, BitVM relies on so-called ‘optimistic redemption,’” he explained.
In this system, bridge operators pay all withdrawal requests to users who wish to withdraw their coins to the Bitcoin main chain before unlocking the BTC deposited on the actual bridge. I have to prove it first. This means that bridge operators must use their own liquidity to pay for withdrawals.
If the operator does not have the liquidity to process all pending withdrawal requests, users' funds may be at serious risk and users may only be repaid “pennies on the dollar” on the main chain there is.
Eric Wall, co-founder of Taproot Wizards, promoted BitVM Bridge in January, but after learning of this limitation and being removed from the group, he became even more skeptical of BitVM Bridge.
“I got kicked out of the BitVM Builder chat for asking more questions,” he tweeted. “As far as I know, they asked multiple people first. [who] Everyone agrees that this bridge is unsafe. ”
However, BitVM supporters argue that Whittle's criticism fails to take into account the risk mitigation strategies available to bridge operators.
“That criticism is valid, but overstated,” said Edan Yago, a developer working on another BitVM-based Bitcoin rollup system. Decryption.
in twitter space Hosted on Friday, Yago explained that some bridge models can simply impose limits on the amount of Bitcoin that can be withdrawn at once, in line with the bridge operator's liquidity limits.
To address bottlenecks during periods of mass withdrawal, bridges can increase the number of operators or manage the bridge with a larger set of operators. “Actually, it's not a big flaw,” he said.
Meanwhile, BitVM's creator, Robin Linus, expressed dissatisfaction with Wall and other critics, claiming that their claims about BitVM were made in bad faith.
“Before you write sensational articles that unfairly attack our work, you should try to understand BitVM,” says Linus. I have written On Twitter. “Otherwise you'll just be trying to spam our group with 'questions' like all the other shitty coin people.”
Bridge versions of BTC are typically backed by coins managed by a custodian or federation in a multisig wallet. Liquid (LBTC) and Rootstock (RBTC) are examples of Bitcoin sidechains that use this model.
What are the disadvantages? Users of these chains must trust that the majority of federation members will not collude to steal their Bitcoins. Still, the custodian is in control of all his coins at all times, so there are security concerns that could arise if users of his poorly designed BitVM chain tried to withdraw all their funds at once. You won't have to worry about this problem.
Edited by Ryan Ozawa.
