Opinion

A Zero-Knowledge Proof Is Verified on Bitcoin For The First Time in History

Published

2 months ago

July 17, 2024

Earlier this year, Weikeng Chen and his partners at venture firm L2 Iterative decided to shift their attention to the bubbling Bitcoin ecosystem. Chen, a Chinese native, had taken notice of the growing interest in Bitcoin development from several large actors in the mining space who started backing different projects in the Ordinals and layer 2 space.

“I never really realized Bitcoin had a development community,” he says, half-joking.

Fast forward to last week, an open-source initiative led by himself, with sponsorship from infrastructure company Starkware, has achieved the first implementation of a zero-knowledge verifier using Bitcoin script.

In an industry where significant breakthroughs are few and far between, those involved in the effort are gushing about the significance of this milestone. Zero-knowledge proofs, they argue, are the key to unlocking Bitcoin’s programmability and scaling its use globally.

Behind this achievement is the remarkable journey of an outsider who picked up Bitcoin development just six months ago and has now coded arguably its most advanced piece of software. I interviewed Weikeng Chen to delve into his motivations, his collaboration with Starkware around OP_CAT and STARKs, and his perspectives on this new era of Bitcoin development.

Starting from scratch

A PHD graduate from UC Berkeley with a specialization in cryptography, Chen explained he began seeking an opportunity to contribute his technical skills to the industry to better position his firm with potential investors and companies. Despite his extensive engineering experience, he quickly realized that resources were scarce and the learning curve was steep. “A lot of the material out there is outdated and does not reflect the current state of development.” His affinity for zero-knowledge technology eventually led his research to focus on Bitcoin’s ability to perform the computations required for verifying zero-knowledge proofs.

As one rabbit hole led to another, Robin Linus’ work on the novel computing paradigm of BitVM came onto his radar. Interested in the potential of using fraud proofs to implement zero-knowledge systems compatible with Bitcoin, he started poking around the white paper and noticed some issues with some of the concepts involved in the system. “I sent a message to Robin asking a few questions about BitVM. My understanding of BitVM from that whitepaper was indeed dead wrong. I remember Robin’s first reaction was to ask me who had told me this,” he recalls laughing. This interaction sparked a brief but productive collaboration between Chen, Linus, and other researchers as they iterated on the original idea and looked for ways to optimize it.

“It was obvious to me that this method could be used to verify zero-knowledge proof so my work quickly went in the direction of implementing a SNARK verifier.”

A verifier is a cryptographic tool that enables the verification of zero-knowledge proofs on the Bitcoin network.

The OP_CAT opportunity

Around the same time, a team at zero-knowledge industry giant Starkware was paying close attention to the emerging activity coming out of the Bitcoin community. For some, it was a long time coming. Starkware founder Eli Ben-Sasson was arguably the first person to discuss zero-knowledge technology in the context of cryptocurrencies at an early Bitcoin conference. Almost a decade later, Starkware’s research and ZK-STARK technology serve as the foundation of a growing number of applications in the space.

“Back in 2013, when I suggested using validity proofs to scale Bitcoin, I was hoping Satoshi might still be around and would make it happen faster. Thanks to cryptography visionaries like Weikeng Chen and Bitcoin OP_CAT researchers like Andrew Poelstra and Ethan Heilman, my 11-year old dream feels now within reach,” Ben-Sasson commented.

Last month, the company announced they were beginning the deployment of numerous initiatives focused on closing the technology gap between Bitcoin and zero-knowledge proofs. A $1,000,000 application grant was offered towards research and exploration into the potential of the OP_CAT soft fork proposal.

The announcement was marked by notable enthusiasm, leaving some to wonder what was driving this optimism. Until recently, the prospects of zero-knowledge technology on Bitcoin had been mostly an afterthought — another OP code that might never see the light of day. Indeed, the difficulty of getting consensus over smaller changes to the Bitcoin codebase made it seem unlikely something more complex would ever come to pass.

Based on conversations with Starkware contributors, it was around May when they caught wind of Weikeng’s progress on BitVM and the mood shifted dramatically. As it would turn out, the developer had already set his sights on the company’s Circle STARKs technology. In a paper released a couple of months ago, Chen had already identified the latter as a “Bitcoin-friendly proof system.”

After some back and forth, both parties agreed to come together and stand up a joint effort dedicated to an open-source implementation of a STARK verifier using the OP_CAT primitive. “I knew it could be done. We just needed to put all the pieces together,” suggests Chen. The “Bitcoin Wildlife Sanctuary” was born.

Two months later, the project appears to have reached its goal thanks to the collaboration of other developers like Pingzhou Yuan, another early BitVM contributor. Late morning last Friday, Chen jumped into the project’s Telegram group to break the news to other participants: “I think I finished the job!”

Following successful local tests, the developer broadcasted a series of transactions to Bitcoin’s Signet testnet network that would execute the entire script. To optimize on-chain usage, the STARK proof, based on Starkware’s open-source Stwo implementation, is split into concurrent transactions chained together using an OP_CAT based covenant.

At 6:29AM on July 12, 2024, the final transaction was confirmed on the Signet network, signaling what proponents believe could be the beginning of a new era of development on Bitcoin.

“This was a tremendous effort and took a significant amount of time,” said Chen. “We started with nothing. There’s no information about ZK proofs on Bitcoin. There’s no information regarding the mathematical operations to follow. We had to build the full stack, which eventually led to the implementation of the STARK verifier.”

Inspiring a new development path

While the results deserve to be celebrated, Chen is insistent the job is not done. Asked if he was optimistic about his work creating the foundation for new scaling protocols like rollups on Bitcoin, the developer was quick to tamper expectations.

“The idea roughly works but the proof-of-concept is not production-ready. Validity proofs also take a lot of block space which might turn out to be expensive in the future.”

Contributors at Starkware acknowledge the challenges ahead but are confident the success of the project represents “a monumental leap forward” towards Bitcoin scaling solutions that can leverage their ZK rollup technology.

One thing is for sure, the collaboration is likely to further strengthen arguments in favor of a potential OP_CAT soft fork. In order to put together the verifier implementation, Chen says he had to develop a reliable framework for covenants using CAT which can serve to highlight the versatility of the script improvement proposal. He believes other developers in the ecosystem can play with his code and come to the same conclusion he did regarding its benefits.

“I don’t think there is a lot of risk once we have developed best practices. There are not that many places where this is going to go wrong. We now have a clear demonstration that OP_CAT can be adapted to various covenant projects in a safe way.”

When questioned about his intention to contribute to a future activation process, the developer readily admits he is not familiar enough yet with all of the dynamics around Bitcoin open-source development. Next, he intends to share his progress with members of the development mailing list and hopes others will be able to contribute review, and provide feedback on his work.

Reflecting on his experience so far, Chen immediately points out the importance of creating a fertile environment for new developers entering the ecosystem. He believes many talented developers are passing on the opportunity to build on Bitcoin because of the lack of a cohesive vision.

“There is not a clear sense of direction right now which leaves contributors perplexed about their ability to impact the future. Hopefully, the emergence of new tools and primitives can improve this situation so Bitcoiners are allowed to dream again.”

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Blockchain

DeFi needs more interoperability, not apps or infra

Published

1 day ago

September 14, 2024

admin

Disclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news’ editorial.

DeFi has too much infrastructure and not enough apps—or at least, that’s what the consensus seems to be in crypto’s town square. Just this year, venture capitalists and private equity investors have poured hundreds of millions of dollars into crypto projects that make infrastructure a priority, if not an exclusive focus.

The highlight reel speaks for itself. In the first quarter alone, VC firm a16z committed $100 million to Eigen Layer, a restaking protocol and infrastructure layer for the Ethereum network; private equity firms Bridgewater Capital and Deus X Capital joined forces to fund a $250 million infrastructure platform; and RW3 Ventures raised $60 million for a fund focused exclusively on blockchain infrastructure and DeFi. These headlines are just a few of many; a quick perusal of any crypto news outlet reveals countless similar announcements.

Focus on infrastructure

The laser focus on infrastructure sparked considerable conversation during and following the Ethereum Community Conferences, or EthCC’24, in mid-July, with many coming to the same conclusion: We need more apps and less emphasis on infrastructure.

It’s a valid perspective on the surface. To put the issue into metaphor, focusing disproportionately on infrastructure is like building the best theme park ever seen—without the rides. Who cares if the park has nice paths, sleek gift shops, and well-equipped food stalls? If you don’t have a roller coaster (or five) on the premises, no one will show up, let alone pay to play.

Theoretical value and potential can only inspire so much customer adoption. A wide variety and deep volume of apps could help hook and retain DeFi users. With more options on offer, users will have more reason and opportunity to not only onboard but also explore.

The problem? Increasing the number of apps can only help the underlying issue (e.g., the long-term growth and sustainability of the DeFi ecosystem) so much. Returning to our metaphor, a good theme park needs a variety of rides to attract guests; however, if those rides are inconvenient to access or unpleasant to experience, interest will taper off sharply.

The real problem: UX

Here, we come to the real problem at the heart of the apps vs. infra debate: user experience.

To say that the DeFi ecosystem (and the emerging BTCFi sector in particular) isn’t intuitive for layperson users would be an almost comical understatement. Even seemingly simple acts such as moving assets between dapps in different ecosystems can become a time-sucking, frustrating exercise for ordinary users. Despite being fundamental to cross-chain transactions, bridging and swapping are virtually impossible for crypto newcomers to figure out without professional guidance. It’s hard to blame a layperson for giving up midway—or opting not to try in the first place.

Infrastructure is meant to enable dApps to seamlessly onboard users, yet the BTCfi ecosystem still grapples with fragmentation issues between various Bitcoin (BTC) variants. While crypto has made progress on interoperability, the user experience remains complex. Traditional bridges and platforms still pose significant limitations and frustrations regarding scalability, slippage, MEV problems, TVL honeypots, and slow and expensive transactions.

The “we need apps, not infra” debate fundamentally misses the point of dApp and infra development by seeking to prioritize one over the other. The number of infra projects doesn’t matter; their quality and impact do.

To be fair, few set out to create a low-impact infra project. DeFi is characterized by its pioneering culture; many dApps are the first of their kind and require their innovators to build appropriate infrastructure rails from scratch.

But, as it is in any race, not everyone can be a winner, and unfortunately, many infra projects today are not and may never be impactful. The days of developing projects for DeFi devotees willing to dedicate time to learning how to use a dapp are fast fading into history. DeFi is approaching its mainstream era—and the amateur users we seek to attract won’t tolerate poor UX or care about underlying infra. To reframe into a common experience: if you’re booking an Uber ride, you don’t care whether the Uber platform runs on AWS or Google Cloud; you just want to get from A to B.

Users first

With this in mind, our end goal should be to have robust infra and abstract it away from a user so they can make full use of their dApps without thinking too hard about how it works. Navigating the DeFi ecosystem—and every app within it—should feel seamless to the point of being intuitive for users. At a minimum, we must simplify interoperability by enabling fast, zero-slippage, MEV-resistant, secure swaps with consistently excellent UX. Next, infra-abstraction must be prioritized; users should never need to see the cogs in the metaphorical machine.

This is possible, and intent-based architecture provides a model for user-centric development in DeFi. Unlike conventional blockchain architecture, which requires users to follow a series of often complex steps to achieve a goal, intent-based architecture seeks to put users first. With this approach, users can state their objective (e.g., make a purchase in a BTCFi app using funds stored on Ethereum) and rely on the blockchain protocol to autonomously complete the technical steps required to achieve that directive. Intent-based models could, if applied widely, go a long way towards ensuring infra-abstraction while improving user experiences and simplifying architecture.

Of course, intent-based architecture isn’t a silver bullet. Projects and protocols must collaborate closely to develop integrations that guarantee seamless interoperability and abstract away operational complexities that users may find overwhelming. Innovators will need to build with amateur users in mind rather than crypto natives with technical knowledge.

It’s time to set aside the infra vs. apps debate and focus on what matters most: the users. Most users probably don’t pay attention to architecture design or care about the investment divide between app and infrastructure projects as long as they follow high-security standards and get the job done. They want blockchain-based finance to be accessible and easy to understand; consumers need to be able to use apps, process transactions, and find new ways to use and make money with DeFi. As innovators and advocates for DeFi’s potential, it falls to us to (re)create the ecosystem into a welcoming world that even amateur users can explore without feeling confused, overwhelmed, or demoralized.

Let’s stop counting infra projects and start making them count instead.

Jeroen Develter

Jeroen Develter is the chief operating officer at Persistence Labs and a seasoned professional in both finance and tech start-up environments. With a decade of international experience in consulting, management, entrepreneurship, and leadership, Jeroen excels at analyzing complex business cases, establishing streamlined operations, and creating scalable processes. With Persistence, Jeroen oversees all product and engineering efforts and is deeply passionate about enhancing Bitcoin defi, or BTCfi, adoption and using intents to develop scalable, fast, secure, and user-friendly solutions. His work at Persistence Labs addresses the significant interoperability challenges between Bitcoin L2s. In addition, Jeroen is also a co-host of the Stacked Podcast, a platform for gaining knowledge about Bitcoin and crypto from prominent Bitcoin builders.

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Markets

Bitcoin Price Action: What to Expect Next

Published

2 days ago

September 14, 2024

admin

Bitcoin’s recent price movements have caused concern among investors about what might come next. However, by looking at key indicators such as the 200-week moving average, Pi Cycle Top Indicator, and the Golden Ratio Multiplier, we can gain insights into potential support and resistance levels for Bitcoin.

Leaning Bearish?

In recent weeks, Bitcoin’s price has fluctuated, dipping as low as $53,000 before stabilizing in the middle of our newly formed $50,000 to $60,000 range. If this bearish price action is to continue and price breaks to lower lows the 200-week moving average heatmap (blue line), a historically critical support level, is currently close to $39,000 but fast approaching $40,000 (white line). This round psychological level also aligns with the Bitcoin Investor Tool (green line), which has also converged with the 200-week moving average, could serve as potential downside targets.

*Figure 1: Converging levels of support at $40,000 if bearish price action continues.*

Nearby Targets

Above current price there are several important levels closer to the current price that investors need to keep an eye on. The Pi Cycle Top Indicator (upper orange line) suggests a crucial resistance level around $62,000, based on the 111-day moving average. The Golden Ratio Multiplier (lower orange line) indicates that the 350-day moving average, currently around $53,000, has been a solid level of support during this market cycle, especially as this is close to the technical $52,000 support and significant psychological support of $50,000.

*Figure 2: Nearby support between $53,000 and $50,000, with immediate resistance between $60,000 and $62,000.*

More Chop?

In the short term, Bitcoin could very well continue ranging between the low $50,000 region and the $60,000 resistance, similar to the range we had formed between $70,000 and $60,000 that led to fairly stagnant price action for a majority of 2024. Despite recent downturns, Bitcoin’s long-term outlook is still promising. In the past, Bitcoin has experienced similar periods of fluctuating prices before eventually reaching new highs. However, this process can take some time, potentially weeks or even months, before a sustainable trend reversal occurs following periods of low volatility.

*Figure 3: Monthly volatility is rapidly decreasing, potentially as BTC finds a new range between $50,000 and $60,000.* **View Live Chart 🔍**

Conclusion

For long-term investors, it’s important to remain calm and not be swayed by day-to-day price changes. Over-trading often leads to poor decisions and losses, and the key is to stick to a strategy, whether it involves accumulating at support levels or taking profits at resistance.

Bitcoin’s recent price action has not been ideal, but with some simple technical analysis and a clear understanding of support and resistance levels, investors can prepare and react rather than over overreact to natural market fluctuations.

For a more in-depth look into this topic, check out our recent YouTube video here: Bitcoin Price Action: What to Expect Next

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Opinion

Revolutionizing Bitcoin Mining: The Power of Three-Phase Systems

Published

3 days ago

September 12, 2024

admin

Bitcoin mining has seen exponential growth since the first ASIC miner was shipped in 2013, improving hardware efficiency from 1,200 J/TH to just 15 J/TH. While these advancements were driven by better chip technology, we’re now reaching the limits of silicon-based semiconductors. As further efficiency gains plateau, the focus must shift to optimizing other aspects of mining operations—particularly the power setup.

Three-phase power has emerged as a superior alternative to single-phase power in bitcoin mining. With more ASICs being designed for three-phase voltage input, future mining infrastructure should consider adopting a uniform 480v three-phase system, especially given its abundance and scalability across North America.

Understanding Single-Phase and Three-Phase Power

To comprehend the significance of three-phase power in bitcoin mining, it’s essential first to understand the basics of single-phase and three-phase power systems.

Single-phase power is the most common type of power supply used in residential settings. It consists of two wires: one live wire and one neutral wire. The voltage in a single-phase system oscillates sinusoidally, providing power that reaches a peak and then drops to zero twice during each cycle.

Imagine you are pushing a person on a swing. With each push, the swing moves forward and then comes back, reaching a peak height and then descending back to the lowest point before you push again.

Just like the swing, a single-phase power system has periods of maximum and zero power delivery. This can lead to inefficiencies, especially when consistent power is required, although this inefficiency is negligible in residential applications. However, it becomes significant in high-demand, industrial-scale operations like bitcoin mining.

Three-phase power, on the other hand, is commonly used in industrial and commercial settings. It consists of three live wires, providing a more constant and reliable power flow.

In the same swing analogy, imagine you have three people pushing the swing, but each person is pushing at different intervals. One person pushes the swing just as it starts to slow down from the first push, another pushes it a third of the way through the cycle, and the third person pushes it two-thirds of the way through. The result is a swing that moves much more smoothly and consistently because it’s being pushed continuously from different angles, maintaining a constant motion.

Similarly, a three-phase power system ensures a constant and balanced power flow, resulting in higher efficiency and reliability, particularly beneficial for high-demand applications like bitcoin mining.

The Evolution of Bitcoin Mining Power Requirements

Bitcoin mining has come a long way since its inception, with significant changes in power requirements over the years.

Before 2013, miners relied on CPUs and GPUs to mine bitcoins. The real game-changer came with the development of ASIC (Application-Specific Integrated Circuit) miners as the bitcoin network grew and competition increased. These devices are specifically designed for the purpose of mining bitcoins, offering unparalleled efficiency and performance. However, the increased power requirements of these machines necessitated advancements in power supply systems.

In 2016, a top-of-the-line miner was capable of computing 13 TH/s with a power consumption of approximately 1,300 watts (W). While considered highly inefficient by today’s standards, mining with this rig was profitable due to the low network competition at that time. However, to generate meaningful profits in today’s competitive landscape, institutional miners now rely on rigs that demand around 3,510 W.

The limitations of single-phase power systems has come to the fore as the power requirements of ASIC and the efficiency demands of high-performance mining operations grows. The transition to three-phase power became a logical step to support the growing energy needs of the industry.

480v Three-Phase in Bitcoin Mining

Efficiency First

480v three-phase power has long been the standard in industrial settings across North America, South America, and other regions. This widespread adoption is due to its numerous benefits in terms of efficiency, cost savings, and scalability. The consistency and reliability of 480v three-phase power make it ideal for operations that demand greater operational uptime and fleet efficiency, especially in a post-halving world.

One of the primary benefits of three-phase power is its ability to deliver higher power density, which reduces energy losses and ensures that mining equipment operates at optimal performance levels.

Additionally, implementing a three-phase power system can lead to significant savings in electrical infrastructure costs. Fewer transformers, smaller wiring, and reduced need for voltage stabilization equipment contribute to lower installation and maintenance expenses.

For example, a load requiring 17.3 kilowatts of power at 208v three-phase would need a current of 48 amps. However, if the same load is supplied by a 480v source, the current requirement drops to just 24 amps. This halving of the current not only reduces power loss but also minimizes the need for thicker, more expensive wiring.

Scalability

As mining operations expand, the ability to easily add more capacity without major overhauls to the power infrastructure is crucial. The high availability of systems and components designed for 480v three-phase power makes it easier for miners to scale their operations efficiently.

As the bitcoin mining industry evolves, there is a clear trend towards the development of more three-phase compliant ASICs. Designing mining facilities with a 480v three-phase configuration not only addresses current inefficiencies but also future-proofs the infrastructure. This allows miners to seamlessly integrate newer technologies that are likely to be designed with three-phase power compatibility in mind.

As shown in the table below, the immersion-cooling and hydro-cooling techniques are superior methods in scaling up bitcoin mining operations in terms of reaching higher hashrate output. But to support such a much higher computation capacity, the configuration of three-phase power becomes necessary for maintaining a similar level of power efficiency. In short, this will lead to a higher operational profit with the same profit margin percentage.

Implementing Three-Phase Power in Bitcoin Mining Operations

Transitioning to a three-phase power system requires careful planning and execution. Here are the key steps involved in implementing three-phase power in bitcoin mining operations.

Assessing Power Requirements

The first step in implementing a three-phase power system is to assess the power requirements of the mining operation. This involves calculating the total power consumption of all mining equipment and determining the appropriate capacity for the power system.

Upgrading Electrical Infrastructure

Upgrading the electrical infrastructure to support a three-phase power system may involve installing new transformers, wiring, and circuit breakers. It’s essential to work with qualified electrical engineers to ensure that the installation meets safety and regulatory standards.

Configuring ASIC Miners for Three-Phase Power

Many modern ASIC miners are designed to operate on three-phase power. However, older models may require modifications or the use of power conversion equipment. Configuring the miners to run on three-phase power is a critical step in maximizing efficiency.

Implementing Redundancy and Backup Systems

To ensure uninterrupted mining operations, it’s essential to implement redundancy and backup systems. This includes installing backup generators, uninterruptible power supplies, and redundant power circuits to protect against power outages and equipment failures.

Monitoring and Maintenance

Once the three-phase power system is operational, continuous monitoring and maintenance are crucial to ensure optimal performance. Regular inspections, load balancing, and proactive maintenance can help identify and address potential issues before they impact operations.

Conclusion

The future of bitcoin mining lies in the efficient utilization of power resources. As advancements in chip processing technologies reach their limits, focusing on power setup becomes increasingly critical. Three-phase power, particularly a 480v system, offers numerous advantages that can revolutionize bitcoin mining operations.

By providing higher power density, improved efficiency, reduced infrastructure costs, and scalability, three-phase power systems can support the growing demands of the mining industry. Implementing such a system requires careful planning and execution, but the benefits far outweigh the challenges.

As the bitcoin mining industry continues to evolve, embracing three-phase power can pave the way for more sustainable and profitable operations. With the right infrastructure in place, miners can harness the full potential of their equipment and stay ahead in the competitive world of bitcoin mining.

This is a guest post by Christian Lucas, Strategy at Bitdeer. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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