Epicenter - Learn about Crypto, Blockchain, Ethereum, Bitcoin and Distributed Technologies - Bitcoin OS: Bitcoin Block 853626 Changed Everything For BTC Smart Contracts - Edan Yago

Episode Date: December 3, 2024

Bitcoin’s Taproot update paved the way for a new & exciting era for Bitcoin, as it expanded its use case far beyond that of an immutable ledger. However, Ordinals, BRC-20 tokens and, more recently, Runes, have limited functionality compared to what DeFi is capable of, on other smart contract blockchains. BitcoinOS envisions a revolutionary Bitcoin economy that stems from truly programmable tokens, unlocking staking, governance and many other use cases. Using BitSNARK and Grail, BitcoinOS enables Bitcoin “rollups”, which act as execution environments that use BTC as gas fee and inherit security from the L1. The missing link was always a trustless bridge between Bitcoin L1 and any potential L2. And Grail Bridge achieved just that - using zero knowledge cryptography, BTC could be transferred to other chains without relying on other custodians’ trust assumptions. In that sense, Bitcoin block #853626 is historically meaningful as it contains the first-ever onchain verification of a zero knowledge proof, on Bitcoin. A truly programmable smart contract operating system on Bitcoin was no longer a mere concept…it became a reality through BitcoinOS.Topics covered in this episode:Yago's backgroundThe effect of Trump’s election on the crypto industryThe goal behind BitcoinOSThe history of Bitcoin’s programmabilityVerifying ZK proofs on BitcoinTaprootOrdinalsBitSNARK, Grail bridge and Merkle MeshBitcoinOS modularity and sequencingAn impending (r)evolution of the industryBitcoin vs. Ethereum L2 landscapeBringing Bitcoin liquidity to CardanoBitcoinOS roadmapEpisode links:Edan Yago on TwitterBitcoin OS on TwitterSponsors:Gnosis: Gnosis builds decentralized infrastructure for the Ethereum ecosystem, since 2015. This year marks the launch of Gnosis Pay— the world's first Decentralized Payment Network. Get started today at - gnosis.ioChorus One: Chorus One is one of the largest node operators worldwide, supporting more than 100,000 delegators, across 45 networks. The recently launched OPUS allows staking up to 8,000 ETH in a single transaction. Enjoy the highest yields and institutional grade security at - chorus.oneThis episode is hosted by Sebastien Couture.

It's kind of insane to try and do computation and data storage on chain. So you do computation and data storage on, off chain. You prove it by posting a proof which gets validated, verified and executed. So make BTC a programmable asset and use the Bitcoin ledger to allow for other assets to be created and used programmatically. This sort of concept is new in Ethereum land. But in many ways, is very, very old in middle. We've got a low-level language, which is BitcoinScript.

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and affordable hardware. Start your decentralization journey today at nosis.io. Welcome to Epicenter, the show which talks about the technologies, projects, and people driving decentralization and the global blockchain revolution. I'm Sabasankuizio, and today I'm speaking with Yago, who is a contributor to Bitcoin OS. Bitcoin OS is a platform that enables ZK proofs on the Bitcoin blockchain, which is really exciting. And this enables lots of different things, including L2s that are more efficient, more scalable, more secure, and lots of other exciting applications. So in today's conversation, we're going to be diving deep into Bitcoin OS, how it enables ZK proofs on Bitcoin and what we can expect from this platform and the ecosystem that has

been built upon it. Yago, thanks for joining me. Thanks for having me. I love Epicenter. And it's always fun to be on the show. Yeah, it's a pleasure to have you on. So, yeah, before we get started, talk a little about your background on you. You've been working in Bitcoin for a while. You know, you worked on Sovereign and other projects. So, yeah, what's, what brought you to, to Bitcoin OS? Well, so I, I was attracted to Bitcoin from pretty much the moment I heard about it. To me, it spoke to a new ability to create property rights that were self-sovereign, digital, and globally available. And that meant that the internet could have an economy. That was a massive idea.

And so I think even before I'd finished reading the white paper, I was already writing a mass email to everyone I knew telling them this was the future. And within a few months, I'd been mulling at an entire, go sort of full-time Bitcoin. And so I've been working since then to try and make it possible for as many people to use Bitcoin as possible and to do so without having to go through intermediaries. Initially, it started with like relatively limited use cases like remittances. I started one of the first remittance companies in the space. And over the years that's evolved, around four and a half years ago, I joined a team building

what became the largest and probably the first significant DeFi project in Bitcoin called Soren. And even as we were doing that, we were also exploring how could we go further? Because even then we had to rely on things like merge mining and federated bridges, which only approximate actually using Bitcoin trustlessly. And we wanted to go the hallway. And we had this hunch that it would be. possible to do that with some of the emerging cryptography we're seeing in particular ZK. As opposed to a lot of Bitcoin axes, especially at the time, we were very curious about

what was going on in the rest of the crypto space, and we thought there was a lot to learn there. And so despite being, you know, from the Bitcoin space, I think I've been working in the modular blockchain world longer than most. Yeah, that's cool. I'm bullish about bringing it together modular in Bitcoin. It feels like those are two things that are so diametrically opposed, but I think both bring strengths to infrastructure that can really help scale defy. And so I'm really, really looking forward to this conversation and dive deeper into that.

So, I mean, today is actually a pretty interesting day to be recording this. I don't know when this will come out, but this is November 6th, is a day, after the U.S. election, a lot of polling stations are still counting to votes, but it is pretty clear now that Donald Trump has won the election and Bitcoin is an all-time high. Maybe by the time this comes out, you know, Bitcoin will be at 100K, who knows. But yeah, what are your thoughts on this new U.S. administration and what it means for crypto generally? Well, I think of the crypto industry and more specifically of blockchains themselves is sovereign jurisdictions, right? They have their own rule set. They're not governed by any court of law outside of themselves.

And they have their own ability to both defend themselves from third party attacks and to enforce their own rules. So they're basically jurisdictions. So I think of the crypto industry as kind of like Singapore in the sky. It's this own jurisdiction, except that instead of being in physical space, it is in what is quickly emerging to be a more important space, which is the digital space, and therefore is globally available. Now, if you start thinking about it through that lens, over the last 16 years, we've seen the crypto asset industry, the crypto space, this Singapore in the sky, become by far the fastest growing economy. in history ever period, right, from zero to, you know, two trillion dollars in 16 years with

exponential growth. And this entire time that industry has been under significant economic sanctions from the world's superpower of the United States of America. So I think the most significant part of this election, with respect to our industry, right, our technology. is that Singapore up until now has been under sanctioned, you know, Sky Singapore has been sanctioned by the United States. We can expect now for most of those sanctions to be lifted. And this remarkable growth story that we've had, it sort of had the roof lifted off of it. So I think we haven't seen anything yet. I think we haven't even begun to see the potential growth that we could see in this industry. It's integration into the rest of the global economy

and what we would call traditional finance. And yeah, I'm extremely enthusiastic about it. It's basically our country is no longer sanctioned by the United States. Yeah, that's a great way to look at it. I think that I think we're in for a really interesting year 2025. I think that the uncertainty that loomed over a lot of U.S. companies building in crypto is going to be lifted, namely by the removal of Gary Gensler and the annihilation of the anti-crypto army folks who no longer, as it appears, much of a voice in Congress or the Senate. And, you know, we're based in Europe, I'm France here in the UK. You know, that regulatory frameworks here, I think, are very different. But the wind of change that's coming to the U.S.

crypto front is going to have significant impacts on markets. I think markets will be the first thing that we see react to this, and it already has, right, with Bitcoin now at $75,000, and also to other jurisdictions who may want to follow suit. I'm not super bullish on the European jurisdiction, and it's more regulatory focused approach to crypto. Does that really matter, though? Europe's kind of like a museum.

You know, we kind of keep Europe around to remember what humanity was like. Right. I mean, what I mean by that is I'm not bullish on what that means for European Starryton Crypto. I think, like, European Starzs and crypto will, you know, we'll have a very hard time to innovate. And that has been the case. That's never been really my concern so much.

I mean, many years ago, I moved to the UK from the US because at, at the United, at the time, you know, the US sanctions are making difficult to build businesses in the space. But over time, especially as we've seen sort of the creation of, you know, DOWs and other ways of, you know, generating revenue and tokenizing projects, the systemic importance of companies in the traditional sense governed by courts of law and jurisdictions of sort of the terrestrial jurisdictions has significantly reduced. And sort of

crypto-native businesses, crypto-native projects are not, don't have a company at all, or are not, you know, associated with one specific company. And so,

yeah, I think there's actually a huge amount of entrepreneurship, not just in Europe, but all over the world. It is the first truly global industry in that there is no, physical center. It's not like San Francisco or London or Shanghai is the center of crypto. It's all over

the world. And that's because we are denizens of Singapore in the sky. So I think that that that concern is important for those businesses that are dealing a lot with Fiat. And that's an important part. But they're sort of the merchants who are who are allowed in trade. between the two jurisdictions. It's not our native economy. Beyond that, I think that actually, if you look at the crypto industry, it is the best way to understand what work will look like in the future. The crypto industry is totally ready for COVID, right? Because it was already fully remote. It was already fully globalized. It was already completely unreliant on the supply chains of the physical world. People will frequently be working for more than one project. Sometimes they're

able to work anon. They get paid in crypto. There's very few agreements that get signed because everything is done through smart contracts. The future isn't evenly distributed, but it's here. And more and more of our industry is going to start looking at crypto, which means that the crypto industry itself is going to become sort of our economy. Yeah, I think that that makes sense from a long-term perspective. I think in the short to medium term, jurisdictions still matter. I mean, look, like,

the U.S. dominance, like, U.S. dollar dominance over stable coins is one indicator that Europe is, like, really lagging behind. And I think that, like, the use of U.S. dominated stable coins is one of the reasons why,

like, one of the indicators that, that Europe is going to lack behind in its dominance over crypto. And then the other is purely just the, you know, like MECA, for instance, you know, if we look at Mika, it makes it very difficult for European startups to set up here and become compliant just because of the high cost. And so it's going to favor and already is favoring large organizations, large institutions like the likes of Binans, et cetera, to set up shop here because they have the ability and the compliance teams and the capital to comply. with compliance. But, you know, if you're a startup and you want to comply with Mika and, like, offer your services here in Europe in a compliant way, that's going to be increasingly difficult.

Now, we'll see, like, what the regulatory firm looks like in the U.S., but for the moment, as far as I know, there is no kind of sandbox, right, in Europe for startups to ease into compliance. It's like zero or nothing. Sure. I don't think we're disagreeing. I agree that this is not good for the jurisdiction that is Europe or the EU. But I don't think that you can identify the jurisdiction with the people, right?

There's nothing stopping Europeans from being involved in this industry. And many, many of them are. They hold the assets. They are involved in, you know, developing the projects. So I just think you're right that we're not going to. going to see overnight the disappearance of the jurisdictions. We don't need to. There is more and more a viable alternative economy and viable alternative methods of commerce which people around the world are able to use. It's sad. I agree with 100%. It's sad that Europeans have to deal with all these

capital controls. But it hurts Europe more than hurts Europeans. Yeah. Well, it's going to be an interesting next couple of years for sure. I'm really, I mean, the thing that I'm most excited about is just like vault building in the markets in the next, in the next, you know, weeks, months and years. And, you know, volatility is typically when, you know, there is the most money to be made. So, you know, everybody should be exposed right now. Not investment advice, but, not investment advice, but not investment advice, but life advice. Cool. So let's take step back and talk about Bitcoin OS or boss. Actually, you know something. I think now that I'm thinking about it, I think we actually met in person in Denver last year, very briefly at the Bitcoin Renaissance event. I came up to your booth and said hi. But yeah, so what is Bitcoin OS and what does that enable fundamentally? So fundamentally what we're looking to do is to make it possible to use Bitcoin as a general purpose ledger with unlimited programmability. So make BTC a programmable asset and use the Bitcoin

ledger to allow for other assets to be created and used programmatically. Or, you know, in sort of more colloquial speak, turn Bitcoin into a smart contract. layer, a smart contract chain. And the way we do this is basically taking the insight that modularity proposes, which is that it's kind of insane to try and do computation and data storage

on chain. So you do computation and data storage off-chain. You prove it. to the chain, or what I prefer to call the ledger, by posting a proof which gets validated, verified, and executed. And that execution allows you to issue new assets, introduce qualifiers, encumbrances, or covenants, basically say how those assets can be used, and to move assets from the ownership of one entity to another.

this sort of concept is new in Ethereum land, but in many ways is very, very old in Bitcoin land. Bitcoin has been designed as a extremely limited system in comparison to most of the outchains that we've seen, in that really it specializes in being a ledger only. whereas mostly due to the influence of Ethereum, other chains have sought to sort of add into the chain, smart contract, you know, execution, a VM, a data availability, basically everything plus the kitchen sink. Right.

Bitcoin is the original lazy ledger. That's right. Bitcoin for the modular world. And it's sort of like the perfect base layer to actually. as a ledger. It's extremely reliable. It's permaware. It's not like software that keeps upgrading. Its codebase is small enough that human beings can understand it, which is very different from Ethereum sort of being the classic example of something

which now there's not a single person in the world who understands its full code base. And it's relatively lightweight also as a result. And so it's the most trusted, most secure system. And for years, there was this debate between Bitcoiners and Ethereum, which effectively was like the early innings of the modular debate where Bitcoiners were saying, look, guys, you're going to be giving up, you're going to be, you're shoving too much into a chain. You're going to be giving up on decentralized. And you're going to find that the system doesn't scale this way. And a few years ago, it became very, very obvious that Ethereum wasn't. scaling, transaction fees were becoming too high. And now, depending on the date, you know, you'll see more than 95% of the transactional activity on Ethereum occurring off-chain, primarily on what we today call roll-ups. So I think in that respect, Bitcoin was designed in a manner which foresaw where we would ultimately have to go and has been sort of like the

Turkle in the race, slow and steady, moving towards a very, very clear North Star, which everyone is galvanizing around. Do you really think this, like, Bitcoin was designed in this way to figure out where it had to go, and it's not just like a happy coincidence that, you know, there are now technologies that enable? Absolutely. I mean, do you really think that in 2014, like, Bitcoiners are thinking, yeah, we're going to have, like, L2s and modular blockchain is on top of Bitcoin right now?

Yeah. And I, I mean, definitely. So actually, it's interesting that you say 2014. 2014 is when the side chain white paper came out for Bitcoin. So that was very, very explicitly how Bitcoiners were thinking about expanding it. And then later in 2016, 2017, when there was the block size wars, right, it was the group of people who didn't believe in that vision who forked themselves off. They said, look, we need to have much bigger blocks.

We need to introduce, you know, more things and have more frequent. forks so that we can upgrade Bitcoin, and the majority of the Bitcoin community, and in particular the Bitcoin developer community, rejected that idea very, very explicitly with the idea that, no, that's not how any system ever has scaled. Yeah, that's a great, great, great point. I mean, those, those Bitcoin scaling debates were, yeah, I mean, it was, it was a really interesting time. I at the time felt that Bitcoin needed to increase its block size in order to enable more transactions. I didn't see Bitcoin as a way to do smart contracts though. I felt like Bitcoin needed to stay as a very simple sort of payment system

that other systems would fill the role of smart contracts. And like up until now, that has been, that has proven to be true, right? Like other systems have filled that role, Ethereum, Solana, and all the other kind of like, you know, modular chains, app chains have come. So I guess there's still time to be proven wrong on that. You know, yeah. Well, I think if you've come into Bitcoin in like, let's say the last five years, you would be forgiven for believing.

I came in 2013, yeah. Oh, so there you go. So I think you'd be forgiven for believing that Bitcoiners didn't believe in smart contracts because the Bitcoiners who have sort of come in over the last five years, don't. And the reason they don't, I think, can be attributed to Stockholm syndrome, right? So Bitcoin didn't have smart contracts. They were held hostage in their own minds by the fact that Bitcoin didn't have smart contracts.

And so they convinced themselves, therefore, that if it doesn't exist in Bitcoin, it must be shit. It must be unimportant. And so instead of saying, well, okay, we're working from first principles on how best to introduce smart contracts to Bitcoin, and they just rejected the idea out of hand. And sort of throwing the baby out with the bathwater, if Ethereum has it, it must be bad. And that's how you ended up with the ultra-retarded maxi, true. I like to call it bag bias.

Yeah, maybe not ultra-retarded. Yeah, no, but I mean, there were some really early applications on Bitcoin that I thought were really cool. I mean, like we at Epicenter, you know, we were using, we were part of the Let's Talk Bitcoin Network, and we were using counterparty to do tokens that our listeners would get access to

and this was all built on on this kind of early version of a Bitcoin L2. It didn't have smart contracts, but these were kind of early ideas of what then became very common in terms of tokenizing

using a blockchain to create other tokens than the underlying store value. So yeah, these are these ideas have definitely like gotten taken whole. Well, I mean, one interesting thing which people don't know, most people don't know, is that this sort of idea that you will have the ledger and also applications was there at the very, very genesis of Bitcoin.

In Satoshi's Bitcoin version 0.1.0, there were the beginnings of the first debt. It was a poker debt designed to allow anyone to play poker over Bitcoin. It was called poker lobby. and was later removed because he felt like, you know, you can't just shove these things into the chain if you want them to work. And then in 2011, Bitcoin invented the first ICO with MasterCoin, which was a system designed to allow for smart contracts on Bitcoin through a meta protocol. So in a way, you know, it's sort of like, you know, people will say that all of Western philosophy

is a footnote to Plato. In a way, all of the development that we've seen in crypto is sort of like a fit note to those first, you know, four or five years of a Cambrian innovation and explosion that occurred in Bitcoin. And we've just been playing with the same themes ever since. So let's talk about the ZK proof. So Bitcoin OS verified the first ZK proof on Bitcoin in block number 853626. proudly on your website. A block of historic importance. A block of historic importance.

How does this work? So, you know, for, like, let's break this down for people who understand Bitcoin at a fundamental level. You know, how do we use Bitcoin to verify as EK proof? And what are the different pieces of technology that enable that? So, yeah, it's very different from how you would do it on a different. chain, right? So in a different chain, like with Ethereum, you have sort of a easy, during complete system. You basically write a verifier into that code. With Bitcoin, it's much more complicated. Obviously, you've got limited data available to you. You know, limited data available to you.

You've got four megabytes per block. You've got a thousand stack limit. You've got an extremely limited scripting language. And so what we had to do is we had to write from scratch a ZK verifier using Bitcoin script. And when you do that, you're among other things, writing a ZK verifier without even the ability to use multiplication. So the script size becomes huge. And then the next challenge becomes, how do you get that into a Bitcoin transaction? And so obviously you can't. And so you need to beyond standard optimization, you also need to

chunk it up. And so their introduction of taproot into Bitcoin, which allows you to create these very complex trees of transactional outcomes allowed us to effectively

split up the script and its potential outcomes as binary outcomes in a large tap-free tree, so we split it up into the leaves. And then the Bitcoin miners aren't able to directly verify ZK proofs. And so you need to construct some kind of mechanism where external verification can be proven unshamed to the miners. And so right now, the way we're doing that is with like a challenge response game

where we bifurcate the we set up a series of precommits and then we bifurcate the the script outcomes until we force someone who's cheating to basically reveal their hand to show that they're contradicting themselves so

this is a yeah there were a lot of mini innovations optimizations, optimizations and sort of breakthroughs along the way to achieve this. There was a paper that came out called Merkleize All the Things, which described splitting scripts up into these Merkel trees and writing them in tap script. There was a paper called BitVM, which described utilizing this to write code of arbitrary complexity. There was the work that we published in Bit Stark and Grail,

which described how we can write a ZK verifier in this. And then there was the very significant optimization work that is ongoing to make this not just fit, but it'd be so cheap on Bitcoin that it's competitive with verification on Ethereum or even cheaper. And we haven't, we're not done yet, right? So there keeps some, now that sort of the ball has gotten rolling the momentum keeps building and new methodologies which improve the speed and some of the

security assumptions with which you can do these things keep in getting published there's work that the boss development team and its community is doing which which is remarkable i mean every every month or so sort of a new startling idea or sometimes even a significant breakthrough is made And so sort of the limits of what you can do with Bitcoin have effectively dissolved away almost entirely. So with Bitcoin OS, with Boss, our goal is an operating system for Bitcoin that allows you to take any arbitrary code of any size, prove it to Bitcoin as a ZK proof, and then verify and execute it on chain. And once you do that, you've effectively got a highly efficient Turing complete system, which can handle any code. And then, you know, sort of the question that has been one of the most fundamental questions in the entire crypto space, which is what when Bitcoin not do goes away, because Bitcoin can do everything. Okay. I want to just like dive into this a little bit. So, um, so the issue is that Bitcoin doesn't have the right, it doesn't have the necessary op codes to produce a ZK proof because it doesn't have multiplications. And so that makes it impossible to do on chain.

It wouldn't produce a ZK proof. That's true. Somebody else needs to produce ZK proof. I think that's true of all systems. Sorry, to verify ZK proof. Yeah. It also doesn't directly verify a ZK proof. And so what you need to be able to do is to create a scenario where you have other parties who can verify the ZK proof. And if the proof is incorrect, they can force a transaction on chain which invalidates the proof. And so that's what I was describing with the bifurcation game. And I think within a few months, we'll be beyond the bifurcation game and we'll have basically one-shot verification. And so let's maybe also just kind of take a tangent here and talk about taproot.

And so what tap root enables for Bitcoin, you know, that wasn't possible sort of pre-tapped route? And how does taproot work exactly to enable, you know, this? this entire new ecosystem of Bitcoin Haltus. So Tabbard had a lot of implications and it was a pretty chunky upgrade to Bitcoin. In terms of it, it was relatively narrow in what it allowed, sort of from a

you know just like surface perspective but what that did is it opened up avenues which have given us among other things ordinals

and runes and BRC 20s and ZK verification on Bitcoin and etc so why did

how did Tapper did this first of all what Tapper did is it introduced the ability to introduce new cryptography

into coin, especially around or specifically around the ability to sign, to generate and sign transactions so that you could generate a tree of conditional transactions, right? And this had all sorts of obvious implementations, like you could create a multi-sig where the signers were not known, or you could create conditional transaction schemes, which were hidden until they were actually performed. And a big part of the motivation there actually was to try and improve Lightning Network by allowing sort of all kinds of conditional payments

which would impact liquidity transitions within Lightning Network. but once you get this tree of, you know, of arbitrary complexity, where you have, you know, different conditional paths that you can walk down, well, that has massively opened up the type of computational complexity that you can introduce into Bitcoin. And so what happened was that when Taproot launched in 2021, there was a lot of excitement and then literally not, nothing happened. Like, it wasn't used for anything significant, right? There were a bunch of experiments, so it was pretty quiet until the beginning of 2023 when Casey introduced ordinals. And that was sort of like the first, it was like the simplest use case, but it was the first use case

that really, really took off. And what we've been, the dividends that we've been seeing since then in Bitcoin have, to a great extent, been from the fact that the level of sophistication and understanding of how to manipulate and utilize taparit transactions has just exploded. Right. What have we learned from ordnals specifically that helps create a path forward for Bitcoin alternatives? I don't know that I could necessarily draw a strict line between ordinals and sort of what we're doing, although we do utilize inscriptions. So we're utilizing to inscribe data. I think one of the things that it did is it sort of introduced this idea of being able to inscribe

very large pieces of data into Bitcoin. If before the operative, which is where you would put, usually put arbitrary data was quite limited, suddenly the space that you had available to you was massively increased. As it turns out, we actually, to, you know, I have optimized things so that even sort of the limitations that we had from a data perspective could have been respected even without taproot. But its primary benefit was getting eyes on the problem and sort of opening up. It's sort of like, you know, once the first person ran the, I don't know, eight-minute mile or whatever it was, suddenly everyone could. There's something about just demonstrating that something is possible.

that makes it possible for others. There's another part of, so we have the BitSnark, which allows for a ZK proof verification. And then there's two other components to Bitcoin OS, which is Grail and Merkel mesh. I'd love for you to also explain what these two pieces of tech do and how they enable better L2s for Bitcoin. Sure. So a bus is an operating system. And like any operating system, it's designed to allow you to have different types of computation, which you can coordinate.

So you could have different external computational environments, let's say two different roll-ups, which a bus will coordinate between them. And then it will also coordinate that with the CPU, which in this case is Bitcoin-mainnet. Right. And so to make that operating system as useful as possible, you need to bundle in. some core use cases. So one core use case is the ability to lock up BTC and other Bitcoin assets and then allow them to be manipulated in external environments.

So other chains, roll-ups, debts, what have you. So that is what Grail is designed to do. And it does it first of all for assets. and then secondarily for messaging, arbitrary data, and perhaps most importantly, for security. So if you're building a roll-up on Bitcoin, it is through Grail that you can sort of write your state to Bitcoin and then use that as the transaction ordering tool for your roll-up, so that your roll-up has the same, or very nearly the same depending on your design decisions. security assumptions is Bitcoin Mainnet and is secured by Bitcoin proof of work.

So that's how you expand Bitcoin both from a scaling perspective and a features or sort of, you know, expressiveness perspective with making few or no sacrifices. And then the next big challenge is if you're doing that, you want to avoid what has happened to Ethereum, which is each of the, these different execution environments, these different roll-ups is its own whole new chain with a whole new world, and you lose the interoperability, the fungibility, the composability, you lose access to the users, the developers, and the whole thing kind of becomes a mess. And so what you want to be able to do is you want to maintain that composability. And so that's what Mercomesh is designed to do.

And, you know, these are things that we're still, you know, they're all in different stages of development. But the idea is, with Bitcoin OS, you have a single chain experience, right? So a user is in one execution environment, let's say it's an environment which is designed to, you know, shields their transactions and provide data and information security for them and privacy of their transactions can interact with an EVM which is focused on defy and a UTXO-based system which is focused on DOWs and within a single transaction, interact with both of these things as a shielded transaction, which will get aggregated and ultimately settled on Bitcoin Mainet.

Okay, got it. So we have the ZK proving aspect. We have the bridging and then we also have the interoperability and composability as one cohesive system, which is Bitcoin OS. Are there any other features that we're missing here? Like, is there an SDK that people can use to build their applications using Bitcoin OS? Not yet. We expect that there will be.

And there's going to be other components. Not everything will be developed by the boss developer ecosystem. Some of the things like data availability, which is going to be really important, you will be able to bring in other tools like Celestia or Nubit, which is kind of like a DA layer specifically designed for Bitcoin, or Babylon are introducing the idea of staking. And so, you know, as an OS, probably there'll be

a set of core components that get bundled together. And then you'll probably also just be able to sort of pick and choose from a large number of other tools, dev tools that you'd want to to use, to make a boss as usable and as valuable to use as possible. Okay. So, so effectively what boss enables or what it allows, it allows

L2s to use Bitcoin for security. They still will, you know, can utilize, should utilize some data availability like Celestia or NewBit or avail. Now, there's one missing

component here, which is sequencing. What's the preferred or kind of recommended way that Boss recommends for sequencing? So on the basic level, Boss is agnostic to the specific sequencing methodology. Where sequencing does become sort of, where Boss becomes more opinionated with regards to sequencing is when you want to have the highest degree of composability. And there, there's sort of this concept of shared sequencers, which we're skeptical of, because getting everyone to use the same set of shared sequencers is, that sounds like the kind of thing that you can do in a centralized environment,

but not in a decentralized environment. And so the way we're looking at this problem is to be able to provide sort of an inter-sequencer data feed, so that sequences who want to be composable with each other will have access to a feed of transactions that are relevant to them. So let's say you've got, and by the way, I tend to not use the term L2 because it has almost lost all meaning. So I use the more general term, sort of external computing environment or external environment. So you have these external execution environments.

And I want to perform a transaction which is going to call on another external environment, right? So I want to have a system which is available where I can basically ping that other system. So rather than trying to force all of the sequencers to basically view everything, we're trying to pare down the problem so that the sequence can message amongst themselves. here, I have a transaction which is going to involve you and you need to ultimately sequence it. Okay, got it. So another question I wanted to ask is you guys are partnered with a team called Merlin Chain, which is an EVM external execution environment, as you put it.

They would describe themselves and what they are looking to become is a Bitcoin roll-up, right? And so they've generated quite a lot of enthusiasm. quite a lot of TVL just in the basis of the fact that they're going to be able to be an EVM roll up to Bitcoin and there is actually remarkably quite a lot of competitors with significant size already who are doing this. So, I mean, Merlin Chain is an EVM based roll-up and certainly there are a lot of other EVM-based roll-ups that are launching on Ethereum. There's also B-M, which I think has its own programming language, although I'm not entirely sure we can clear that up here. But if we take a step back here, do you think that, so my, my view is that

the EVM long term is going to lose market share to other more modern VMs that are abstracted, where sort of security and complexity is extracted away from the developer that is more performant, doesn't have some of the legacy bugs that EVM. has like re-entrancy, etc. And that is more modern and tuned for modular blockchains. And the analogy I like to draw here is how the early development languages of web like PHP and ASP have mostly given way to more modern languages and frameworks like Node.js with the advent of mobile and the modularization of the Web2 stack.

With Bitcoin, you know, now, that Bitcoin is sort of leapfrog the entire sort of, you know, defy period of the last couple years. Isn't there an opportunity here for Bitcoin to adopt very modern VMs as the kind of flagship L2s on Bitcoin, VMs that are WASM based, like the slot of VM, like Move, and attract new, new waves of developers that are coming from, say, like emerging markets, that are looking to learn the next generation of blockchain languages that will be used in the next 10, 20 years. Yeah, where do you sit here on this issue? Yeah, so I think the way to think about boss and the bus stack is we have a low-level language that we need to sort of compile.

This is an analogy, but it's a pretty close analogy. We've got a low-level language, which is a big, Bitcoin script. And we need to be able to compile a bunch of different languages, sort of more abstract languages down there into Bitcoin script. And the way that we do that is through the medium of ZK proofs. Right. So basically, any language, any language which can be proven as a ZK proof. And now current iteration and probably, you know, for the foreseeable future, we're talking about Groth 16 Snark's. If you can turn your code into a Groth 16 snark, then Boss can read it. And so actually, Boss is very agnostic to the specific higher level language that you're going to be using.

Now, with regards to EVM, I mostly agree with you, and in fact, I would go even further than you. Right. So I think the reason EVM has been so popular is an artifact of the way that Ethereum was constructed. So Ethereum hard-coded its VM into the system. And then Solidity became the most popular sort of language for it, but basically everyone is forced to use VVM. And then the way that other chains have developed is, well, they've just forked that. And so they've taken all of that with them. And that's true for other L1s, and it's also true for roll-ups to Ethereum.

Now, we are, I think, rapidly moving into a world where almost everything that we know and sort of assume around our industry is wrong. And so the best example of this is we call ourselves the blockchain industry, right? But that is just a symptom of us not understanding what we're actually doing. Nobody wants a blockchain. blockchain is a sort of a stumbling block towards getting what we want. It's this really annoying, slow, non-performance database. What we actually are is we're a property rights industry. We're a digital crypto asset industry.

And it turns out that you don't need most of what you would have in a blockchain to generate that at all. So two examples of companies that are really, I think, at the leading edge of this is risk zero and succinct. And both of them have developed more general purpose ZK VMs. These are VMs which allow you to take Rust and then later tight script, Wazom, whatever, compile that down

to directly to ZKPruce. And so what that means is that we're actually not going to have sort of chain-specific or blockchain-specific languages. We're going to see this year, and certainly in the years following, the developers being able to choose whatever their favorite language is, and then compile that down. And it also means that this idea of you need to have your own L1 or you need to be a chain at all is going to look very anachronistic to us quite soon. Because you've got this really great ledger, right? It's Bitcoin.

you use that as your ledger. You've got data availability. Multiple different projects are competing to do better, more efficient, faster, more scalable data availability. You've got the VM. You can create an execution environment which is highly optimized to your particular use case. And then you have a whole assortment of builders and sequencers who are sequencing and providing interoperability. composability between these different execution environments.

And so at that point, you've completely unbundled the blockchain. Why would you even want a blockchain? It's sort of getting in the way of everything that you want to do. It's constraining you. It's heavy. It's expensive. And so I think we're actually at the early innings of an entirely new phase. The blockchain industry is dead.

The crypto asset industry is. about to take off and this whole idea of layer ones is going to disappear. And so this prism through which we've been looking at our industry, right, that it's a blockchain industry is wrong and projects are going to have to either choose to adapt to this new environment, which is I sometimes call the post-chain environment or I think they're going to with her. Yeah, I think I was watching a talk from

yeah, I think it was Murad, you know, this meme coin guy, I was watching his talk from token 2049 and he says basically like, you know, what, what this industry does is produce his tokens and

and the technology really doesn't matter. And in the same way that like, if you look back at in the last 20 years, internet and web development are the industry, developing. What we produce is we produce

services and software that that improves people's lives. We didn't produce like, you know, database technologies or you know, we don't look at it as like, you know, the database, like the connected database

industry or, you know, the kind of like cloud industry. We look at it as the software industry or the services industry. or all the different like food tech, med tech, fintech industries that were produced there. And I think that that's like an apt analogy for crypto and thinking about it from like the end product, which is tokens and applications that allow people to utilize those tokens.

It makes a lot more sense than looking at it from the underlying technology perspective. That's, I think, a symptom of the industry being very early, which is something I believe in, really adamantly. Like I think we are much, much earlier than people think we are. Or people think generally, I think we are. You know, we're somewhere still in the 90s, early 2000s era of the internet where nothing works. Building applications is a mess.

There are like tons of different ways you can do things. I mean, I was a web developer in like 2010. I mean, was a web developer since my teens and, you know, remember it was like building a website 15 years ago, just 15 years ago. Building website was just so incredibly complicated. You had to write CSS for different versions

of the same browser. You had to build different applications for depending on the type of device you were on. Nothing was secure. There was no HTTP. Everything was, nothing was private. Deployments were slow. You had these very unsecured

kind of languages like Ph.P. of my SQL. And that all changed in the last 15 years long. So, you know, think of, think of that in terms of blockchain years. We haven't even scratched the surface. We haven't stretched the surface. And this was 20 years after the first website, right? Like, so we have not scratched the service. And I really believe that we're much earlier than we collectively think we are. You know, looking back at Ethereum, bringing it back to Ethereum. And, you know, Ethereum, I think, has somewhat suffered from its roll-up-centric roadmap with cannibalization of the L-1's business model. And we've seen these charts, right, of base generating millions of dollars in revenue,

but yet only paying several thousands of dollars of fees to Ethereum. How does Bitcoin avoid this? Is Bitcoin fundamentally different from the fact that it's proof of work and that it's just a different animal than Ethereum? Or are there really like lessons to be learned here where Bitcoin needs to do things differently in its L2 strategy?

Well, first of all, Bitcoin is fundamentally different in many very significant ways. First of all, Bitcoin, the chain doesn't have an asset

in the same way that Ethereum, the chain has an asset, right? The entire Ethereum chain has been built around ETH. It's the method of consensus. You need to stake it. It's highly dependent on revenues. And it's extremely over-engineered. BTC is a simple commodity.

And so I think Ethereum is phenomenal. It's been, you know, an absolute treasure trove of experimentation and innovations. But at the same time, it's been sort of running around like a headless chicken for exactly the same reason. It doesn't know. Ethereum is not built from first principles. It sort of is in a constant race to run after the last narrative, right? So smart contracts, when you couldn't do smart contracts on Bitcoin, proof of stake, because Bitcoin with proof of work, modularity because we needed to solve the technical debt that we created

with those first two decisions, ultrasound money, because we need to compete with BTC. And so, Ethereum is fantastic, but it's not built from first principles. BTC is a product in and of itself. That's why it's called digital gold. it's extremely simple to understand, and that's what makes it so popular. And so Bitcoin is not reliant on BTC in the same way that ETH is reliant. What BTC is, it's a first-class citizen in the ledger, right? It is like the first example and the best example of an asset secured by the world's best ledger.

another way in which Bitcoin is very different from Ethereum is it has what you could call second mover advantage, right? So despite what people think, it's not really important who's first. It's important who's lost. And so one of the advantages that we have when building bosses, we get to look at Ethereum, we get to look at other systems and recognize some of the pitfalls. So we're building in composability and interoperability as a first-class citizen. And then the third sort of conceptual problem is Ethereum itself is very dense, right? It's got so much in it. And the roll-ups that have been built for Ethereum,

partly as a shortcut have just basically replicated that chain. And so they're not built as execution environments. They're built as sort of alternate L1s, which just happened to have an optimistic or a ZK bridge to Ethereum. And so in many ways, actually, their relationship with Ethereum is possibly less than what you ideally would want for Ethereum, although it's great for the roll-ups themselves. And I think that's going to change both for Ethereum and for Bitcoin.

But for Bitcoin, it might actually happen sooner, partly because of the simplicity of Bitcoin, where we will start seeing sort of highly optimized non-EVM. We don't have the baggage of the EVM that everything needs to be built for EVM. And so you're likely to see sort of Rust and WASM and TypeScript experimentation on Bitcoin, and perhaps even more aggressively than you would see it on Ethereum. That I'm not sure about. Yeah.

Yeah, that I'm very hopeful for. I'm very much a proponent of building new environments with which developers can interact and build applications in a much more efficient, scalable and secure way. And I think we get there by sort of investing and believing in like rust-based VMs, Watson-based VMs,

move-based VMs more so than the VM, which, you know, is 10 years old in a few months. And just wasn't built for, I think, the future of blockchain. Even though I think it will continue to be relevant, you know, in the same way that Ph.B continues to be relevant. You know, it's still power something like 70% of the websites. But it's not the thing that college kids are going to be learning. and getting excited about in the next 10 years.

Yeah, before we wrap up here, I also want to talk about Cardano, which is interesting. Because you guys are working with Cardano to bring Cardano liquidity to Bitcoin, or maybe it's the other way around. Bitcoin liquidity to Cardano, sorry. So, yeah, what's happening here? So I think the big story is that from Bitcoin's perspective, everything is an external execution. environment, right? And if you can hook into these systems and extend Bitcoin into these systems, they become scaling tools, they become basically layer twos to Bitcoin. And Cardano is quite unique in that Cardano has a lot of sort of philosophical agreements with Bitcoin,

but from a technical perspective, there's one which is particularly important, which it is is, which is that it's UTXO base. And so to do address and transaction mapping, as well as transaction finality between Bitcoin and Cardano actually turns out to be relatively easier, right? It can be done with an EVM. It can be done with any chain. But Cardona have, at least in the early innings, a important advantage. And so the Cardano community and the Cardano developer community in particular saw that we had verified ZK and Bitcoin and they reached out to us and as they dived deeper

there was this growing sense of excitement which culminated in one of the weirdest things that have ever happened to me which is I went and gave a talk at a Cardano conference which that in and of itself was an extremely unexpected outcome for me but but then also the reaction

I was just, you know, it was just another one of many panels that I've given at a conference, but suddenly sort of the crystallization, it's sort of Cardano realized a lot of what we just discussed over the course of this call, right, that the whole crypto space is sort of inverting, that you can utilize Bitcoin as the sort of global canonical ledger. That doesn't mean that you're dead in the water instead of fighting. that, you can actually utilize that. You can gain access to, you know, a multi-trillion dollar asset base, hundreds of millions of users. You can provide data and compute that Bitcoin itself is never going to do for itself. You can do it trustlessly. And so I think Cardano is turning out

to be just one. We discussed Merlin, B squared, and there's a whole bunch of other projects that haven't made public announcements that are sort of also integrating boss. But Cardano so far are the biggest sort of project and community that have gone public with the fact that they are sort of pivoting or starting to see themselves as an ideal platform to provide asset management and smart contracts to Bitcoin. I think that this is going to be thematically one of the most important things over the course of 2025 and beyond. right this idea that we've had in our heads for the last 13 years which is that you've got bitcoin and then you've got all of the competitors to bitcoin like i don't you know i don't agree with a lot of the what i call you know ultra-retarded maxi stuff but uh michael saylor has this thing where he says there is no second best and in one very deep respect he is correct um there is no other

platform. There is no other ledger out there that is going to prove to be the credibly mutual, globally spanning ledger that all of these other chains and projects can plug into. Everyone else is sort of a threat to themselves. Bitcoin competes with nothing. And so this idea that you're competing with Bitcoin, I think, has been dead in the water for seven years. The high water mark of it was 2017, where sort of there was the Ethereum and flippinging. Since then, EF, in BTC terms, has fallen more than 80%.

Pretty consistent monotonic decline. The flippinging is never happening. Bitcoin is a fact. It remains as much as ever the center of gravity of this entire industry. And so the game has changed. It's now the technology

for the first time through Boss is also available where you can integrate with Bitcoin and provide services to that asset base. And not only that, but utilize Bitcoin as a ledger for many assets beyond BTC. Is Cardano the place where it's going to happen, though? I mean, like, Cardano is in the top market cap assets by virtue of having been early, and it's very liquid on sexes.

But the Cardano defy ecosystem and the Cardona ecosystem generally is not that exciting, I think, to a lot of people. You know, TVL is like $2.30 million. I just checked. You know, like the excitement around things like Solana, you know, even Cosmos, I think, you know, as a place for a defy innovation powered by Bitcoin liquidity feels more credible to me than Cardano. I mean, well, you know, the interoperable.

internet is sort of like this one globally spanning network that we all use. And on top of the internet, over the last, it's called it 20 to 15 years, a number of companies have launched, which have grown to multi-trillion dollar market caps, right? So many have, you know, hundreds of billions in dollars in market cap, but there's several that have trillions in market cap. If you roll the tape forward with Bitcoin, if, even if it can continues at a sort of 50% of its current trajectory is going to be somewhere between $20 and $40 trillion in asset value 12 years from now. There is going to be several companies or more likely protocols that are going to have trillion dollar valuations building for that ecosystem.

Now, the question is, who is it going to be? I think some of the winners are already out there. Cardano might be one of them. And Cardano could have a very, very significant trajectory change if they end up, you know, becoming a leader in providing a really great UX experience and a really secure smart contract experience for Bitcoin. Other projects are taking a different approach, and they're sort of more tightly coupling themselves to Bitcoin. They're basically becoming roll-ups and not, you know, they don't have their own consensus mechanism at all.

I don't know if it's going to be, you know, if Cardan, is going to be a project that wins here. And I definitely don't think there's only going to be one winner, right? So you could have Cardano being one of 10 very, very significant projects 10 years from now. That's really a question of execution. But what we are definitely seeing is more and more projects are starting to recognize that this is not just a viable path, but the most viable path towards positioning yourself for 2025 and also 2035.

And so if it was just one or two projects, it was just Cardano and just Merlin, I would say, okay, that's just a straight line. But it's enough significant projects and many, many, many smaller sort of innovative projects that at this point, it's a trim. Cool. So what's on the roadmap for Bitcoin OS

and how can people stay up to date with a project? And what is your call to action to our audience? Okay, well, you know, the first versions of the ZK primitive are already unbecoming. And we're now in the process of integrating different pieces of the OS to launch sort of V1 of the production level OS. It's going to make it easy for the vendors to start using these different primitives. And we expect to roll that out over the next that's called for four or five months. So where things will get particularly interesting is the beginning of next year.

In terms of following us, that's pretty easy. You can follow me on Twitter. I'm at Idanyago. You can follow Bitcoin OS, which is at BTC underscore OS. And there's a whole bunch of other projects, Amangin Cardano and Merlin, that you can follow as well to track their program. In terms of cool action,

like your audience, I think, is particularly tech savvy. You guys have a lot of developers who listen to you. I think there's just a huge blue ocean opportunity. Bitcoin has been

sort of this dormant platform in many respects with a completely underutilized asset base. And all of that is changing now extremely rapid. So there's huge opportunity. There's huge opportunity.

to do new things, but there's also a huge opportunity to just see what's worked in other environments in Ethereum, in Solana, and bring that over to Bitcoin. And then just more broadly, I think thinking about what we're building, not through the lens of chains, but through the lens of ledgers, of assets, and computation or asset management, I think is an extremely helpful frame of mind to understand what's going to happen next. we're not a blockchain industry. And if we ever were, that time is coming to an end. Couldn't agree more.

That's great note to end on. Yago, thank you so much for joining us today on Epicenter. It's been great learning about Bitcoin OS and diving into Bitcoin for the first time and to be honest. It's been really exciting and interesting. Thanks again. Thank you.