BitVM was designed as a perfect method to express Turing-complete contracts on Bitcoin. Its perfection is in no changes to the already existing consensus rules of Bitcoin. In such a way, standard blocks such as large Taproot trees, hashlocks, and timelocks can make a system that will be responsible for handling contracts and difficult computations.

The Nitty-Gritty of How BitVM Works

BitVM functions due to the easy and at the same time really powerful architecture. The novelty of this method is in the way it handles computational workloads. Other blockchain operations are oriented mainly on the on-chain technology, but BitWM works mainly based on difficult off-chain calculations. This highly lessens the number of information that should be stored on the blockchain. So, it lessens price and higher efficiency. The off-chain approach also influences flexibility and speed. In such a way, users as well as developers can use simulations without the risks of blockchain overwhelm.

Three mechanisms characterize how BitVM works, so let’s discuss them in detail. The first one to mention is Bit Value Commitment. This basic element gives users the freedom to set Bitcoin value. The value can be β€œ1” or β€œ0”. This is the fundamental thing because the execution runtime of Virtual Machine is divided into several transactions and in such a way it extends.

The next important mechanism of BitVM is challenge-response. It means that a couple of challenges and responses can detect the false claim. In such a way, most false claims will be quickly detected and disproved.

One more thing is the usage of logic gates. So, each function can be used as Boolean. These logic gates can help with the expression of almost any Boolean function in BitVM.

BitVM functions


Why BitVM Is a Significant Development

To begin with, BitVM is a universal method so that users can run any type of contract or computation.

Of course, for new clients, it may be challenging to understand how everything works with Bitcoin and BitVM. However, it is not as complex, and another distinctive characteristic of BitVW is efficiency. The actual influence on the blockchain is really insignificant.

The security of BitVM is also a huge advantage of this system. The verifying method is quickly catching cheats and penalizes them. Such a verifier guarantees the security for all the users.

Limitations of BitVM

There are a couple of discussions around the topic of BitVM limitations. In one article, the author points out the price of the data management which occurs off-chain.

Other users share information that BitVM is almost identical to the Ethereum Virtual Machine. There are even a couple of explanations for why they consider the idea relevant so you can easily find and question this point.

Of course, there are some limitations of BitVM, but they can be easily managed. During the next couple of months, several of these issues have been already changed. So now users can enjoy a really capable Bitcoin script.

Limitations of BitVM


Bitcoin Smart Contracts and BitVM

BitVM project tried to implement smart contracts on Bitcoin via 2nd layer. At this period of time, it is at the theoretical stage, and the founders of the projects are extremely positive about involving more developers in the near future.


Read more: Smart Contracts: Building Trust in the Digital Realm


Two parties are in the process of the smart contracts, they are verifier and provider. In such a way, it is possible to free the system from fraud. At the same time, BitVM agrees that the 2-factor system is a drawback that should be changed somehow in the future. One more, drawback of BitWM is it depends greatly on the off-chain rather than on-chain transactions to finish the smart contracts.

There were and will be various attempts to utilize smart contracts in the network of Bitcoin. During some of the attempts, developers were trying to find the variants that were connected with the limitations of the network. This was somehow possible because of the easier scripting language if compared with Solana for instance.