The Bitcoin halving, also referred to as "the halvening," is a highly anticipated event where the reward for miners who add a block to the blockchain successfully, is reduced by half. This happens every 210,000 blocks (approximately every four years).
The first halving occurred in 2012, reducing the block reward from 50 BTC to 25 BTC. The next halving happened around April 19, 2024, and reduced the reward to 3.125 BTC per block.
This has significant economic implications, as it cuts miners' revenue while applying pressure on Bitcoin's market price due to reduced new supply.
Miners must then rely more heavily on transaction fees to maintain profitability. For Bitcoin investors and holders, the halving event can lead to potential price appreciation as the reduced issuance makes the supply more scarce, assuming demand remains constant or increases.
Despite its success, the Bitcoin blockchain ( L1) faces some key technical challenges, including:
But, rollups can help.
Rollups can enhance Bitcoin's scalability by batching non-standard transactions and publishing them to the Bitcoin blockchain. This dramatically reduces the computational costs of verifying those transactions, while still allowing them to leverage Bitcoin's security guarantees. Rollups enable Bitcoin to serve as a secure settlement layer for more complex off-chain processing.
Layer 2 solutions that utilize Bitcoin's blockchain for securely storing data and finalizing transactions can make an important contribution to providing miners with a reliable and steady stream of revenue. By dramatically boosting the overall transaction throughput and functional capabilities of the Bitcoin network, Layer 2 systems can draw in more users.
This increased usage and demand would create a more vibrant and self-sustaining ecosystem around Bitcoin, where transaction fees paid in BTC to leverage Bitcoin's security model generate an ongoing income source for miners.
ZKPs are a cryptographic technique that allows someone to mathematically prove a statement is true, without revealing the private inputs. The prover can demonstrate computational integrity to a verifier while preserving the privacy of underlying data.
ZKPs address Bitcoin's limitations in a scalable way, and without compromising the network's core principles of security and decentralization.
Some ways ZKPs can help scale BTC include:
By allowing users to build zero-knowledge applications that leverage existing Rust packages, the RISC Zero zkVM makes it quick and easy to build powerful verifiable software applications.
Let’s explore how this general-purpose zkVM supports the implementation of ZKPs in a modular Bitcoin ecosystem.
Zk-Rollups using RISC Zero zkVM can deploy Bitcoin Layer-2 (L2s) that help scale the Layer-1’s (L1s), Bitcoin. By using the revm crate, we can run an EVM bytecode interpreter on the zkVM. This means that you can run solidity contracts on the EVM bytecode interpreter that runs on the zkVM. Bitcoin L2s can therefore benefit from EVM equivalence. Bitcoin rollups can then batch thousands of transactions, process them in the zkVM, and produce a succinct validity proof asserting the correctness of the execution as well as the output data.
RISC Zero zkVM can act as a parallel execution environment that helps enable Bitcoin modularity by separating Bitcoin’s “state” from the transaction execution. This means that our zkVM can not only be used to support zk-rollups but also across the stack. Some examples are zkBridges, where zk-SNARKs enable efficient cross-chain communication by proving state transitions on one chain to another. Or, zk Light clients, which use SNARKs to verify consensus, execution and data availability, providing high security for users.
Modularity also extends to flexibility. No one is locked in when using our zkVM. In fact, based on the Bitcoin L2’s architecture, they can adopt new VMs such as WASM VM in the future.
Citrea: RISC Zero is powering the first Bitcoin zk-rollup and enabling infinite computation.
Using RISC Zero’s zkVM, Citrea custom-built a ZK-provable execution environment in a fraction of the time and utilized the existing Rust Ethereum ecosystem to supercharge their ZK development process.
They also launched an open-source BitVM ZK Groth 16 verifier, which will enable developers to generate a STARK proof using RISC Zero, wrap it into a Groth16 proof, and generate its corresponding verifier in the rv32i and BitVM instruction set. This is a critical unlock for verifying proofs on Bitcoin.
With Citrea, RISC Zero is powering the programmable execution layer that will enable developers to make Bitcoin the bedrock for diverse on-chain apps and financial activities.
Build on Bitcoin (BOB): BOB is an L2 solution that combines the security of Bitcoin with the programmability of Ethereum.
It provides full EVM compatibility, allowing developers to build decentralized apps on the Bitcoin network. BOB acts as a "co-processor" for Bitcoin, enhancing its functionality while leveraging its robust security and widespread adoption.
RISC Zero is powering two parts of the BOB stack:
Syscoin: Syscoin is a merge-mined platform with unique properties that make it an ideal settlement layer for rollups, contributing to the security and scalability of the Bitcoin network without competing with Bitcoin's scarcity-driven economy.
Syscoin is exploring modular scaling through Rollux: an optimistic bridge running atop Syscoin's NEVM. The optimistic model allows anyone to challenge the state on Rollux, and in the future will be converted into a ZK rollup to remove any optimistic trust assumptions.
Syscoin and the Rollux team are looking to use RISC Zero to deploy a ZK Light Client solution to accelerate their modular stack.
The Promise and Limitation of Bitcoin zk-Rollups
The rise of zero-knowledge rollup technology has opened up new possibilities for enhancing the capabilities of the Bitcoin network.
Current zk-rollup projects operating on top of Bitcoin do not require any direct changes to the core Bitcoin protocol, However, fully realizing the potential of zk-rollups may require consensus changes to the Bitcoin blockchain. For example, by introducing new opcodes to enable native verification of Zk proofs. This presents an interesting challenge.
Zk-rollups demonstrate innovative ways to expand the utility of Bitcoin without disrupting its core properties. However, unlocking the full benefits of this technology may demand some evolution of the underlying Bitcoin protocol. Navigating this balance while pushing the boundaries of what's possible on Bitcoin through L2 solutions, while potentially requiring protocol-level changes, is an ongoing area of research and development for the zk-rollup projects in the Bitcoin ecosystem. Finding the right path forward – one that maintains Bitcoin's decentralization and security will be crucial.
At RISC Zero, we are powering key innovations that allow Bitcoin to scale while preserving its foundational principles.
With the 2024 halving event reducing new Bitcoin issuance, there is an economic imperative for scaling solutions that can boost throughput and programmability. Our zkVM is a pivotal piece of this puzzle.
The convergence of halving economics, zero-knowledge breakthroughs, and our modular zkVM are catalysts to Bitcoin's evolution. While realizing the full potential may require harmonizing L2 solutions with potential protocol upgrades, we aim to blaze this trail without compromising Bitcoin's core values.
At RISC Zero, we foster an ecosystem where efficient execution layers like zk-rollups can securely integrate with Bitcoin's settlement layer. Our zkVM sits at the nexus of scaling, programmability, and privacy; shaping the future of decentralized systems across the blockchain industry.
