Connect with us

Opinion

Bitcoin Rollups – The Rock Or The Hard Place?

Published

2 months ago

on



Rollups have become the narrative focus of scaling Bitcoin lately, becoming the first thing to truly “steal the limelight” from the Lightning Network in terms of wider mindshare. Rollups aim to be an off-chain layer two that is not bound or constrained by the liquidity limitations that are central to the Lightning Network, i.e. end users required someone allocate (or “lend”) them funds ahead of time in order to be able to receive money, or intermediary routing nodes requiring channel balances that can facilitate the movement of the payment amount all the way from sender to receiver.

These systems were originally developed to function on Ethereum and other Turing complete systems, but as of late the focus has shifted to porting them to UTXO based blockchains such as Bitcoin. This article is not going to discuss the current state of things being implemented on Bitcoin currently, but going to discuss the function of an idealized rollup that people are aiming for in the long term depending on features Bitcoin currently does not support, namely the ability to verify Zero Knowledge Proofs (ZKPs) on Bitcoin directly.

The basic architecture of a roll is as follows: a single account (or in Bitcoin’s case UTXO), holds the balances of all users in the rollup. This UTXO contains a commitment in the form of a merkle root of a merkle tree that commits to all the current balances of existing accounts in the rollup. All of these accounts are authorized using public/private key pairs, so in order to propose an off-chain spend a user must still sign something with a key. This part of the structure allows users to leave without permission whenever they want, simply by crafting a transaction proving their account is part of the merkle tree, they can unilaterally exit the rollup without the operator’s permission.

The operator of the rollup must include a ZKP in transactions that update the merkle root of account balances on-chain in the process of finalizing off-chain transactions, without this ZKP the transaction will be invalid and therefore not includable in the blockchain. This proof allows people to verify that all changes to off-chain accounts were properly authorized by the account holder(s), and that the operator has not conducted a malicious update of balances to steal money from users or reallocate it to other users dishonestly.

The problem is, if only the root of the merkle tree is posted on-chain where users can view and access it, how do they get their branch in the tree in order to be capable of exiting without permission when they want to?

Proper Rollups

In a proper rollup, the information is put directly into the blockchain everytime that new off-chain transactions are confirmed and the state of the rollup accounts change. Not the entire tree, that would be absurd, but the information necessary to reconstruct the tree. In a naive implementation, the summary of all existing accounts in the rollup would have balances and accounts simply added in the transaction updating the rollup.

In more advanced implementations, a balance diff is used. This is essentially a summary of what accounts have had money added to or subtracted from them during the course of an update. This allows each rollup update to only include the changes to account balances that occur. Users can then simply scan the chain and “do the math” from the beginning of the rollup to arrive at the current state of account balances, which allows them to reconstruct the merkle tree of current balances.

This saves a lot of overhead and blockspace (and therefore money) while still allowing users to guarantee access to the information needed for them to exit unilaterally. Including this data in a formal rollup that uses the blockchain to make it available to users is mandated by the rules of the rollup, i.e. a transaction that does not include the account summary or account diff is considered an invalid transaction.

Validiums

The other way to handle the problem of data availability for users to withdraw is to put the data somewhere else besides the blockchain. This introduces subtle issues, the rollup still needs to enforce that the data was made available somewhere else. Traditionally other blockchains are used for this purpose, specifically designed to function as data availability layers for systems like rollups.

This creates the dilemma of security guarantees being as strong. When the data is posted directly to the Bitcoin blockchain, consensus rules can guarantee it is correct with absolute certainty. However when it is posted to an external system, the best it can do is verify an SPV proof that the data was posted to another system.

This entails verifying an attestation that data exists on other chains, which is ultimately an oracle problem. Bitcoin’s blockchain cannot verify anything completely except what occurs on its own blockchain, the best it can do is verify a ZKP. A ZKP however cannot verify that a block containing rollup data was actually publicly broadcast after being produced. It cannot verify that external information is actually publicly available to everyone.

This opens the door to data withholding attacks, where a commitment to the data being published is created and used to advance the rollup, but the data is not actually made available. This renders users funds beyond their ability to withdraw. The only real solution to this is to depend entirely on the value and incentive structure of systems completely external to Bitcoin.

The Rock and Hard Place

This creates a dilemma in terms of rollups. When it comes to the data availability issue, there is essentially a binary choice between posting the data to the Bitcoin blockchain or somewhere else. This choice has massive implications for both rollup security and sovereignty, as well as their scalability.

On one hand, using the Bitcoin blockchain for the data availability layer introduces a hard ceiling on how much rollups can scale. There is only so much blockspace, and that puts an upper limit on how many rollups can exist at one time and how many transactions all rollups in aggregate can process off-chain. Every rollup update requires blockspace proportional to the amount of accounts that have had balance changes since the last update. Information theory only allows data to be compressed so much, and at that point there is no more potential for scaling gains.

On the other hand, using a different layer for data availability removes the hard ceiling on scalability gains, but it also introduces new security and sovereignty issues. In a rollup using Bitcoin for data availability it is literally not possible for the state of the rollup to change without the data needed by users to withdraw being atomically posted to the blockchain. With Validiums, that guarantee depends entirely on the ability of whatever external system is being used to resist gaming and data withholding.

Any block producer on the external data availability system is now capable of holding Bitcoin rollup users’ funds hostage by producing a block and not actually broadcasting it to make the data available.

So which will it be, if we ever do get to an ideal rollup implementation on Bitcoin that actually enables unilateral user withdrawal? The rock, or the hard place? 



Source link

Related Topics:
Continue Reading

$100k

Why $100,000 Bitcoin Is Right Around The Corner

Published

14 hours ago

on

November 19, 2024

By


If you have been following Bitcoin news today, like I have, you can not be more bullish on Bitcoin. Seriously, what a time to be alive!

Just today:

  • MicroStrategy purchased another 51,780 BTC for $4.6 billion and announced its plans to raise $1.75 billion to buy more bitcoin
  • Semler Scientific bought another 215 BTC for $17.7 million
  • Genius Group launched its Bitcoin treasury by purchasing 110 BTC for $10 million
  • MARA Holdings announced a $700 million raise to buy more BTC
  • Metaplanet issued ¥1.75B debt offering to buy more BTC
  • Global healthcare group Cosmos Health adopted BTC as a treasury reserve asset

Insane, right?

The corporate Bitcoin adoption is going absolutely parabolic. The race among public companies to stack the most satoshis has kicked into hyperdrive.

Some other news:

  • Donald Trump is meeting with Coinbase CEO Brian Armstrong and is expected to discuss appointments
  • Donald Trump’s media $DJT in talks to purchase crypto trading platform Bakkt
  • Options trading on BlackRock’s spot Bitcoin ETF could be listed as soon as tomorrow

It’s only Monday, and my head is already spinning! With this tidal wave of positive adoption, I’d be downright shocked if we don’t blast through $100,000 per Bitcoin this week.

I expect a flood of more bullish news and serious FOMO buying pressure this week. Seriously, tighten your seatbelts, folks—with this momentum, Bitcoin hitting a hundred grand is coming sooner than you imagined!

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.



Source link

Continue Reading

bitcoin rewards

Buy Drugs, Get Bitcoin

Published

22 hours ago

on

November 18, 2024

By


Follow Frank on X.

A co-worker recently told me about NiHowdy, a platform that helps you save on prescription medication while earning bitcoin rewards in the process.

For context, I’m a fan of bitcoin rewards programs like Fold, which let you earn bitcoin for making everyday purchases (I can’t help but appreciate deals like this — I grew up with a coupon-clipping mom.) I also like that NiHowdy differentiates itself from other bitcoin rewards companies by offering a discount on a product.

While I’ve yet to use NiHowdy, it seems fairly simple to do so. You simply sign up through the company’s website, where you’ll obtain either a discount card or a QR code that can be scanned at selected pharmacies. You can also use the website to compare prices and find the cheapest locations to purchase prescription medication (the company is also working on a mail-order service).

When you pay for your prescription, you’ll earn 3% back in bitcoin, which automatically gets deposited into your Coinbase account. (While I’d prefer NiHowdy had partnered with a different exchange, as I don’t like how Coinbase partners with government agencies to surveil transactions, this isn’t a deal breaker for me.)

NiHowdy sees itself as fighters of Big Pharma…

…which I’d say is a bit of a stretch, but it does seem to provide a good way to save money on potentially burdensome prescription drug costs while at the same time stacking sats.

The ultimate hack here would be if you could use your Fold debit card to pay for your prescriptions, earning some extra sats on top of the 3% back in sats you earn through NiHowdy.

If that’s possible, I might get so pumped that I’ll need to go and refill my sedative prescription.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.





Source link

Continue Reading

Bible

Would Jesus Be Bitcoin's Biggest Fan? A Holy Take

Published

1 day ago

on

November 18, 2024

By


Follow Mark on X.

Did you know the Bible is practically a financial thriller? Yep, it’s got more money talk than a Wall Street boardroom—over 2,300 verses on cold, hard cash. That’s right, the Good Book might as well have been the Good Ledger, with more mentions of money than heaven and hell put together. So, in the spirit of financial enlightenment and a dash of divine humor, let’s ponder a celestial question: Would Jesus have been a Bitcoin enthusiast?

In the cosmic comedy of finance, Bitcoin burst onto the scene like a rebellious angel, vowing to overthrow the old guard of dusty banks and sneezy central bankers. With its blockchain chariot and peer-to-peer prowess, Bitcoin promised a financial utopia: freedom from restrictive permissions, the tyranny of borders, and the inflationary antics of print-happy central banks. But as this digital David takes on the Goliath of traditional finance, one can’t help but wonder: Would Jesus be sporting a “Satoshi Nakamoto” T-shirt?

Jesus had a lot to say about wealth, and not all of it was about giving it all away. He was into fairness, helping the needy, and not letting your left hand know what your right hand’s up to—basically, the first-century version of anonymous transactions. Enter Bitcoin. With its knack for bypassing the money changers of today (looking at you, central banks), could Bitcoin be the modern answer to ancient prayers?

But let’s not convert all our loaves and fishes into Bitcoins just yet. Jesus also warned about the love of money being a root of all kinds of evil. And with Bitcoin’s rollercoaster value, it’s more bipolar than a Galilean storm. Would JC be cool with something that turns investors into overnight millionaires or leaves them crying into their keyboards? Divine verdict: probably not.

Jesus was all about helping the little guy, and Bitcoin’s decentralized gospel sings a similar tune. It’s a financial lifeline for the unbanked masses, promising escape from the clutches of overbearing governments and hyperinflation hellfires. But here’s the heavenly hiccup: Bitcoin’s not exactly the Robin Hood of crypto. Its kingdom is a tad unequal, with a few digital disciples holding the lion’s share of the coins.

In the beginning, Satoshi Nakamoto created Bitcoin. And it was good. Fast forward a few millennia (in internet years), and Bitcoin’s disciples are spreading the good news far and wide. Like Jesus’ OG crew, they’re on a mission to liberate the financial faithful from the Romans—err, central banks—of our time. But instead of crosses, they bear the mark of the Bitcoin, preaching the blockchain gospel of hope and financial freedom.

Despite being crucified by critics more times than we can count, Bitcoin keeps rising from the dead. Its resilience mirrors the biblical tales of underdogs and persecuted heroes, proving that sometimes, faith (and a good encryption algorithm) can move mountains—or at least market caps.

Picture this: Jesus mulling over the Bitcoin craze. It’s not just water into wine; it’s transforming the financial system. Would He be a fan? You bet! Jesus, with His knack for shaking up the status quo, might just see Bitcoin as the loaves and fishes of the digital age—multiplying financial access for the masses and sticking it to those temple-money-changer types, a.k.a., the centralized banks of today.

Imagine Jesus in today’s digital marketplace. He’d likely be intrigued by Bitcoin’s potential to empower the least among us. After all, here’s a technology that transcends borders, cuts out the financial middlemen, and offers a beacon of hope to those sidelined by traditional banking systems. Bitcoin’s blueprint for a more inclusive economy might just get a celestial thumbs up.

But would He dive headfirst into the speculative whirlpool? Probably not. However, He might champion the underlying principles—freedom, equity, and the chance for everyone to participate in the global economy. Jesus, the carpenter, was all about building things up, not tearing them down. In that light, Bitcoin could be seen as a tool, not just for wealth creation, but for forging stronger communities through shared economic opportunity.

As we tread the ethereal pathways of cryptography and conscience, let’s ponder a Jesus-inspired approach: balancing our digital dollars with acts of kindness, generosity, and a commitment to uplifting others. The ledger of life isn’t just about accruing Bitcoin; it’s about the wealth of our actions and the currency of our character.

So, while diversifying your earthly portfolio, remember the most precious investment of all: love and goodwill. After all, in the grand scheme of the universe, those are the assets that yield the highest return. And who knows? In the grand, interconnected network of humanity, we’re all part of a greater blockchain, each of us a link in a chain of acts of kindness, stretching out into eternity. Now that’s an investment strategy even Jesus might endorse.

This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.



Source link

Continue Reading
Advertisement [ethereumads]

Trending

    wpChatIcon