Are Bitcoin L2s Real? with David Seroy (Bitcoin Dave)

That's kind of how I feel about this whole broader like L2 renaissance and what's possible in in the Bitcoin world. Like I don't care if it sinks or swims. I'm pretty sure it's going to be very successful. But even if it's not, like this is ideas worth pursuing. You know, like we are freaking missionaries, not mercenaries. And if people disagree with it, it's like, bring it on.

Welcome to Banklist, where we explore the frontier of internet money and internet finance. This is Ryan Sean Adams. I'm here with David Hoffman, and we're here to help you become more.

Bitcoiners.

Oh, oh, is that what we're doing, David?

Yeah, it's a Bitcoin episode.

This is a really simple premise for today's episode. We brought on somebody who could answer the question for us, for me. I had more of the questions actually than you, David, coming into this episode. Are Bitcoin layer twos real?

What do you mean by

What do you mean by that question?

I mean

That's kind of what I was going to ask our guests and did ask our guests. But what I what I sort of mean is I was under the impression that Bitcoin did not have the expressivity, did not have the virtual machine, was more like a calculator and not a computer at its base layer, and therefore had a very difficult, if impossible, probably impossible time launching what Ethereum calls a roll up, which is you know some sort of chain that is secured by the base chain. And uh this next guest says actually, layer twos are possible on Bitcoin.

asterisk.

Within asterisk and he explains why. So I thought it was a a brilliant um like episode. And it doesn't answer all of my questions, but opens the door to possibility that um I I didn't know fully existed. And so I've still some research to do on this. This is probably the first episode of several in the future where we explore this topic in more depth. But I don't know, this this guest uh has some legitimacy on this topic. And actually, you know this person, right? And so he came in my Twitter DMs and I was like, or my my tweets, and I was just like, David, who is this? This is a good answer. You had already met him in person.

Yeah. This is this is your basically how your and my relationships is is like you who are who is this person? Oh yeah, I met I met this person that one time. Um yeah. Uh I I uh we'll talk about a little bit of the intro, like how we met David in in in the show. Shout out Steven from uh Alpha Alpha. Um one thing I want to say before we go into this episode is that when we talk about like the differences between layer ones, usually there are things that get lost in translation, especially when I do like some of these Solana episodes, like I have to like stop and just like translate uh for the listeners who I know are like thinking in Ethereum terms. But across smart contract platforms, that's actually pretty easy to do and not all that complicated. It's just like usually swap out one word, replace it, replace it with a different word, right? It and then there's like the conversation of like learning about Bitcoin versus Ethereum. And if like learning about Solana to Ethereum is like English to Spanish or something, learning about like Ethereum to Bitcoin is like English to Chinese. Like you can translate, it does work, but it's entirely different. And so when we talk about layer twos on Bitcoin and we talk about fraud proofs and we talk about different things, like yes, we are close, but like we need to actually some things don't always carry over. And so I think that's important context for listeners to go in. Is like you don't just swap one thing out with a one word and place it with a Bitcoin word. That's not how it works. Uh, and so like layer twos and fraud proofs and ZK rollups and like expressivity on Bitcoin will look different. It's like same, same, but different. And so you can't perfectly translate these things. And you'll you'll listen to me and Ryan like stumble our way into that realization once again as we have this conversation with Bitcoin Dave.

Yeah, there were there were some stumblings in this episode, but it's uh it's a pretty like we didn't have an agenda going in. We just wanted to pick David Seeroy, who's our guest. Uh we call him Bitcoin David, because we have two Davids in this episode. Uh pick his brain. I think uh hopefully the result is something that can further your knowledge on what Bitcoin is building, because there's kind of a renaissance going on, a little bit, like some glimmers of it.

It's a is a Dave, Bitcoin Dave, the Bitcoin David presents a zero-to-one moment in Bitcoin building

that is potentially ahead to us.

Super exciting. So, guys, stay tuned for that. But before we get into this episode, we want to thank the sponsors that made it possible, including Bankless Nation. We are super excited to introduce you to David Seeroy. Yes, we have a second David on the podcast today. This is the Bitcoin David. Bitcoin Dave. I guess my co-host, maybe uh David, David uh Hoffman, I should refer to you as Ethereum David. So we got Bitcoin David here, and he is a Bitcoin wizard, I would say. What does that mean? He is definitely an armchair researcher in the Bitcoin roll up ecosystem. He loves Bitcoin and uh loves projects that are building on Bitcoin. He actually had probably the best answer I received to a question about the Bitcoin roll up community and the L2 community I put out and is part of the reason for this podcast. Bitcoin David, welcome to Bankless.

Yeah, thanks for having me. I'm excited. I can't believe you guys let a Bitcoiner on here.

Oh, oh we do that from time to time.

We bring Bitcoin to

We just had um

Nick Carter is our number one most recurring guest. Yeah.

who else, who else? Who is

After Vitalik. After Vitalik Buterin. Then Nick Carter.

David, who am I forgetting? Being of the

We've got um got Eric Wall. Uh Eric Wall like on four or five times.

smalling of the sp

We had Lynn Alden on like four five times. We just had Robert Breedlove on for his first time. Robert Breedlove, of course. Of course. Okay, fair. Bitcoin represents at least two to three percent of all bankless podcasts.

that when you put it like that, that's very small.

We gotta pump those numbers up.

Yeah, it's undersized as far as uh yeah market. Yeah, but well that's what we're doing today. So Bitcoin David I understand actually you guys have met in person. Yes.

So this isn't your first meeting.

I was in we were introduced by uh Steven Cesaro of the Alp Alpha podcast fame. Uh and David was introduced to me as Bitcoin Dave, and that's how his name is stuck in my brain. And once again, entering this uh recording room, I was like, wait, David, are you called Bitcoin Dave? Or is that just how Steven introduced you? And apparently that's just what Steven introduced him.

Yeah, yeah.

Now it's stuck.

We actually we actually played pickleball the next day and

So then we paid pickleball.

David David told me about a really cool idea. He said he wants to put pickleballs on the blockchain.

And he said that the uh the supply chain is under duress and yeah, it needs Ethereum.

Which we're track track points, so no one can cheat with points.

Well, but isn't that the broader question? Like which blockchain? Because uh now Bitcoin can support some tokens. I'm I'm hopeful uh Bitcoin Dave, you you'll you'll tell us a little bit about this because maybe maybe I'll start the conversation. We're gonna talk about the broader Bitcoin ecosystem. But my base question in that tweet that you helped answer for me was this okay, a question for the unbiased big brains. That's how I couch this. Can Bitcoin have an L2 rollup that satisfies the five slices of the decentralization decentralization pie? I was referring to the L2 beat pie, where there's like kind of five slices that demarcate uh decentralization. I mean, is there an exit window? Do you have uh some sort of decentralized sequencer, a few other things? Or does it lack expressivity? And so uh, David, I I want to throw that that question to you basically. So, can Bitcoin now support L2 rollups? And like, what does what does that even mean uh in in the context of Bitcoin?

Yeah, well, I'm gonna give a really clear answer here and say yes, but it depends. And really, it kind of depends on, I'd say, three general things. First is like what flavor of roll-up are we talking about? Are we talking about like a fully validating ZK rollup, a sovereign rollup that has no proving system, or an optimistic rollup? The second question is you know, are we saying with the soft fork or without a soft fork? And then the third question is like what level of trust is acceptable? And if we jump all the way to the answer that people probably care about, is like, no, we want no soft forks, we want fully trustless, and it needs to be a fully validating ZK or validity rollup.

If that's the exact uh criteria we need, then technically, no, Bitcoin cannot do that. And that is because Bitcoin does not have the ability to natively verify zero knowledge or validity proofs on the base layer.

Where this gets a little bit interesting is is BitVM.

And BitVM potentially allows us to hack in a ZKP verifier into the Bitcoin L1 without a soft fork.

And so BitVM was this white paper that Robin Linus, a developer and amazing researcher in the Bitcoin community, wrote back in mid December. And that was about six weeks ago. And so the claim with BitVM is that we can now compute anything on Bitcoin. And we can express Turing complete smart contracts on Bitcoin.

And so if this is true, which it appears to be, then this is kind of the fundamental breakthrough that really changes the paradigm for what is possible on Bitcoin.

The caveat with BitVM is that it's a little bit clunky and it has a trust assumption of one of n, meaning that you can perform this computation where we could have a ZKP verifier on the Bitcoin L1, but the people that are performing that computation could be a group of 10, 100, 1,000 people.

You only need one of them to be honest in order to kind of uh you know get the the crypto economic security there. And

you know,

some people would say, well, that's that's that's not good enough. But but if we can um you know essentially optimistically create a validity uh prover, then

Maybe that's good enough to build the bridge. And I mean that technically building a bridge, but also metaphorically building a bridge to cross that chasm that Bitcoin typically can't cross. And if you can cross that chasm, then you get into the whole world that Ethereum is in. You get into this idea of like shared sequencers and cross-composability and pre-confirmations and tons of different execution environments, like some really truly amazing stuff. So BitVM is the real innovation that this could possibly happen without a soft fork in a little bit of a hacky way. And that may be good enough to kind of build out the rest of this. And maybe down the line, we say, okay, like we want the fully trustless version. We're going to soft fork in a dedicated ZKP verifier.

Okay, so I I want to get back to like vit bit um bit VM as kind of maybe the part of the final destination here, but could could we zoom out for just a minute before we get into some of these more technical details? So where's this innovation coming from in Bitcoin? Like, why has Bitcoin just discovered that oh wow, we can we can uh launch roll ups and and layer twos on top of Bitcoin? Like, is this some kind of a builder renaissance? Has this always been possible? It's just there wasn't the funding or the projects, or is this just kind of new novel experimentation? Are they seeing the success of Ethereum? They're just like, hey, we could just do that here. Where's this renaissance coming from?

Yeah, I mean, there's a bunch of moving puzzle pieces here. Like, to be clear, like a lot of this stuff was kind of discussed like early on in Bitcoin talk forums. Like there is a post from Greg McFell, who's like kind of this like OG, just like amazing Bitcoin developer, where he he talks about bringing, you know, ZKPs to Bitcoin. And he specifically references Ellie Bensan, who is now like, you know, who was the founder and is now the CEO of like Starkware. So this has always kind of been on Bitcoin's radar. And there's even quotes from Satoshi where he he talks about, you know, like if the technology has caught up, like this would be, you know, the best way to improve and kind of like scale Bitcoin. Like all the evidence is there.

Where this really kind of starts, in my opinion, is like back in 20, or not starts, but like, you know, is back in 2014 where Blockstream released their white paper for sidechains. And this was like this scaling vision for Bitcoin, where it's like you're gonna have the Bitcoin base layer, and then you're gonna have all these side chains. You know, maybe you have a big block sidechain, maybe you have a privacy side chain, you know, maybe you have like whatever other specialties. And everybody loved this vision, but it was this the one problem is the Blockstream white paper said, Oh, by the way, like we haven't solved this trustless two way peg. Like, so for now, you're just gonna have this federated model where you bridge your Bitcoin into these other ecosystems, you'll trust us with a multi sig. We'll solve the trustless two way peg later.

That never happened. And in the interim, Bitcoin went down the path of like Lightning Network. You know, they got Segwit in, you know, it fixed the transaction malleability, which was an issue that prevented Lightning from from occurring. All that happened with the block size wars in 2017. And then we said we're gonna go all in on essentially Lightning.

While that was happening, as you guys know, like the Ethereum community went down this other path where you said, you know, we're going to pursue uh, you know, plasma and then state channels, and then you eventually settled on roll-ups. What we're now seeing in the Bitcoin community, in my opinion, is that Lightning is massively hindered. And I think people drastically overestimate essentially what it can do. And don't get me wrong, I love the Lightning community. I support the builders, but there are some systemic issues, which, in my opinion, are probably going to be insurmountable for it to truly scale Bitcoin. And Ben Carmen, uh, he goes by Ben the Carmen on Twitter, really wrote like this this very nice uh like post where he kind of said, like, he's like, I'm a Lightning lover. He's like, I am one of the developers. He's because sometimes I look around and be like, what are we doing? Like, like, is this really the right path for Bitcoin to scale? And he labeled that, he he laid out like all these reasons why Lightning like it has some issues, you know.

And you

know, I think a lot of those issues are going to be tough to get past. And even if we do get past them, it's just like,

you know, it doesn't have a global state. You're going to have the inbound liquidity issues. It doesn't have very good privacy.