Hey Ethan, thanks for your interest and feedback!
So you aren’t wrong in your comment here.
At least when taken out of context that is. My proposed method is in fact considered to be pretty ideal as far as trustless goes.
Let me provide more examples, and comparisons for a better understanding:
Trustless Bitcoin Bridges: A Comparative Analysis
In the context of blockchain technology, especially Bitcoin bridges, the term “trustless” refers to the ability to operate without relying on a trusted third party, such as a federation or centralized entity. Let’s explore how Nillion’s NMC protocol achieves this and compare it with Wrapped Bitcoin (WBTC) and Stacks’ Nakamoto Upgrade.
Nillion’s NMC Protocol
Trust Model: Fully Trustless
Mechanism
- Encryption and Secret Sharing: The Bitcoin secret key is encrypted and divided into shares using Linear Secret Sharing (LSS). These shares are then distributed across a decentralized network of nodes.
- Cross-Chain Condition Validation: A condition on another blockchain (e.g., Ethereum) must be met to initiate the reconstruction of the secret key.
- Reconstruction: Nodes collaborate to reconstruct the secret key without any single node having control, ensuring both decentralization and security.
- Cryptographic Security: The entire process relies on advanced cryptographic techniques, eliminating the need for any trusted third party.
Advantages
- Decentralization: No central authority; nodes work together independently.
- High Security: Uses strong cryptographic methods to protect the secret key.
- Interoperability: Facilitates secure transfers across different blockchains.
Wrapped Bitcoin (WBTC)
Trust Model: Federated
Mechanism
- Custodian-Based System: Bitcoin is held by a centralized custodian (e.g., BitGo) and WBTC tokens are minted on Ethereum, representing the locked Bitcoin.
- Redemption: Users can redeem WBTC for Bitcoin through the custodian.
Advantages
- Liquidity: Provides access to Bitcoin liquidity on Ethereum for decentralized finance (DeFi) applications.
- Convenience: Easy integration with Ethereum’s DeFi ecosystem.
Disadvantages
- Centralization: Relies on a trusted third party (custodian).
- Security Risk: The custodian is a single point of failure and a potential target for attacks.
Stacks’ Nakamoto Upgrade
Trust Model: Decentralized, but not Fully Trustless
Mechanism
- Proof of Transfer (PoX): Miners transfer Bitcoin to participate in securing the Stacks blockchain.
- Smart Contracts: Enables smart contracts that can interact with Bitcoin, adding functionality without moving Bitcoin itself.
- Nakamoto Consensus: Anchors Stacks’ transactions in Bitcoin’s security.
Advantages
- Security: Leverages Bitcoin’s security to protect Stacks’ operations.
- Decentralization: Uses a network of miners and validators.
- Enhanced Functionality: Allows for smart contracts and advanced interactions with Bitcoin.
Disadvantages
- Complexity: More complex than direct tokenization methods.
- Trust in Protocol: Users must trust the Stacks protocol and its security model.
Decentralization vs. Cryptographic Security
Nillion’s NMC Protocol:
- Decentralization: Achieved by distributing the encrypted secret shares across multiple nodes.
- Cryptographic Security: Nodes use secret sharing and encryption to process data blindly. They cannot censor or exploit the transaction because they lack sufficient control or knowledge. The security of the system relies more on cryptographic techniques than on decentralization alone.
Wrapped Bitcoin (WBTC):
- Centralized: Relies on a trusted custodian.
- Security: Dependent on the integrity and security of the custodian.
Stacks’ Nakamoto Upgrade:
- Decentralization: Utilizes a decentralized network of miners.
- Security: Enhanced by Bitcoin’s underlying security but still requires trust in the protocol.
Summary Appendix:
- Decentralization: Spreads out control and decision-making across many nodes, reducing reliance on any single entity.
- Cryptographic Security: Ensures data is processed securely without any node having complete control, thanks to techniques like encryption and secret sharing.
- Nillion’s NMC: Nodes process data blindly, meaning they cannot censor or exploit the transaction, ensuring true trustlessness.
- WBTC: Relies on a centralized custodian, making it less decentralized and trustless.
- Stacks: Decentralized and secure but requires trust in the protocol’s implementation.
@Ethan I would say Stack’s method stands out as the type of implementation where the concern from your comment might hold some weight. Though in the context of this implementation I’m proposing these concerns are removed by the fact that the nodes on Nilion are basically just service nodes, where their functionality is mostly to divide the workload for efficiency and to add redundancy to avoid any single POFs. Their ability to censor or exploit the operations is next to Nil.
Nillion’s crypto primitive (NMC) is quite novel, and offers some new methods that weren’t before possible. Not in the current state of things.
So, similar to something like a “witness encryption Bitcoin bridge” | see: Trustless Bitcoin Bridge Creation with Witness Encryption | would be. My BTC bridge proposal uses advanced cryptography in this case Nillion’s new primitive to provide a fully trustless bridge. The bridging method here is also great in the sense the its heterogenous, and so could be used with Eth, Sol, Dot etc also could be used to bridge LTC or DOGE as well.
Also. Nilion, claims that the computations can be processed at near PlainText speeds. Making this method viable as well as practical to implement.
Hope this helps to clarify!