Expansion of Bitcoin’s DeFi Capabilities

Bitcoin developers aiming to enhance the blockchain’s decentralized finance (DeFi) features are considering the use of zero-knowledge (ZK) proofs. These capabilities currently require modifications to the software, specifically a software fork, which introduces complexities.

This concern was shared by Edan Yago, a Bitcoin veteran and influential figure in the BitcoinOS (BOS).

“Forking a blockchain, especially one with $2 trillion worth of value on it, is like open-heart surgery,” Yago explained. “Fallouts from such actions could be serious, and while hard forks pose specific challenges, any type of fork carries risks.”

Forks can either be “soft,” allowing for compatibility with older versions, or “hard,” which disrupt compatibility altogether and necessitate updates by all users.

The implementation of ZK proofs is a cryptographic method designed to verify the truth of statements while keeping their contents private. Although this capacity is not yet integrated into Bitcoin’s software, potential modifications like OP_CAT or OP_CTV could facilitate its introduction. Yago also advocated for finding alternative methods to enable this technology without a fork.

BitcoinOS has now open-sourced the BitSNARK protocol, which provides developers with access to ZK verification and allows interoperability with blockchains like Ethereum, Solana, and Cardano.

This new protocol streamlines proving the results of complex computations in only 300 bytes suitable for standard Bitcoin transactions, potentially advancing BTCFi—a term representing DeFi implementations on Bitcoin.