Bitlayer's Charlie Hu Discusses the Future of Bitcoin Bridging Technologies

In an exclusive interview with BeInCrypto, Charlie Hu, a key contributor to Bitlayer, discusses the future of Bitcoin bridging technologies

In a exclusive interview with BeInCrypto, Charlie Hu, a key contributor to Bitlayer, delves into the future of Bitcoin bridging technologies, including the Finality Bridge and the BitVM Bridge.

These groundbreaking solutions aim to solve Bitcoin’s limitations in scalability, programmability, and DeFi integration, offering a more secure and efficient way to move Bitcoin assets across blockchain ecosystems.

Hu elaborates on the technical differences between traditional multisig setups and the innovative trust-minimized approach offered by the BitVM Bridge. He also highlights how the Finality Bridge enables Bitcoin holders to engage in DeFi activities, ultimately contributing to the growth of the DeFi space and improving liquidity.

The Role of the Finality Bridge and BitVM Bridge

The Finality Bridge and BitVM Bridge represent the next evolution in Bitcoin bridging technology. These solutions aim to enhance Bitcoin’s ability to interact with decentralized finance (DeFi) ecosystems, which has traditionally been a challenge due to Bitcoin’s lack of programmability.

Charlie Hu explains that the BitVM Bridge is the third generation of Bitcoin bridging solution technology.

“The BVM bridge is the third-generation Bitcoin bridging solution technology. We have wrapped Bitcoin, which relies on an older multisig setup—a federation of signers where the majority must be honest. However, it’s clear that we can’t rely on wrapped Bitcoin as a long-term bridging solution. We need a new generation of technology that is more trust-minimized and doesn’t depend on the current multisig structure to bridge Bitcoin liquidity from Bitcoin Layer 1 (L1) to EVM (Ethereum Virtual Machine) or other programmable environments,” Hu said.

Previous systems, like wrapped Bitcoin, relied on older multisig setups, where a federation of signers needed to maintain honesty to ensure security. However, this structure has proven to be unreliable and exposes users to potential risks.

“In contrast, the BitVM bridge is more trust-minimized. We only need to trust one signer to be honest, and that signer can unlock the funds through the two-way pegging mechanism,” Hu continues.

This improvement reduces the potential for malicious actors to compromise the system, addressing vulnerabilities exposed by recent incidents like the Bybit hack. Unlike wrapped Bitcoin, which relied heavily on multisig setups, the BitVM Bridge uses Bitcoin scripts and two-way pegging mechanisms to ensure more secure and efficient transactions between Bitcoin Layer 1 (L1) and Ethereum Virtual Machine (EVM) environments.

Enabling DeFi on Bitcoin

The limitations of Bitcoin Layer 1 in enabling decentralized finance are well-known. Bitcoin L1 does not support smart contracts, meaning it cannot facilitate lending, automated market makers, decentralized exchanges, or any other DeFi activities. Bitcoin’s UTXO-based cash system is primarily designed for payments, but it struggles with scalability and versatility in more complex scenarios.

To address these issues, the Finality Bridge offers a solution by connecting Bitcoin to more programmable, trust-minimized environments, like Layer 2 solutions.

“Without the bridge, you can’t really do DeFi. Bitcoin L1 doesn’t have smart contract capabilities or programmability. You can only make payments. To enable Bitcoin DeFi—where Bitcoin holders want to earn yield, engage in on-chain options, liquid staking, and other creative DeFi use cases—you need to bridge to a programmable, trust-minimized environment like a Layer 2 solution,” Hu explains.

Bitcoin L1’s scalability is constrained by its ability to process only seven transactions per second (TPS), which results in network congestion. This can lead to high fees and failed transactions as users compete to pay for limited block space.

“Many users experienced this during the 2023 ordinals mint,” Hu recalls. “People paid for gas fees, but their transactions failed because they paid too little compared to others who were paying higher fees. This led to a situation where everyone was fighting to pay higher fees, but in the end, they burned their Bitcoin and the transactions still failed.”

The Finality Bridge solves these problems by enabling Bitcoin to interact with Layer 2 solutions, thereby allowing Bitcoin holders to participate in DeFi activities and scale their transactions without the limitations of Bitcoin L1.

The Versatility and Future of the Finality Bridge

One of the significant advantages of the BitVM Bridge is its ability to bridge Bitcoin assets to a wide range of ecosystems, including both EVM and non-EVM chains. Through its recent partnerships with chains such as Arbitrum, Plume, Base, Starknet, and Sonic, the BitVM Bridge is positioning itself to be an essential component in the future of cross-chain interoperability.

Sonic, for example, uses Solana VM, which opens the door for Solana ecosystem integration, despite its indirect connection to Bitcoin.

“Our bridge is versatile, supporting both EVM and non-EVM chains, making it highly adaptable,” says Hu. “For example, Sonic (which uses Solana VM) connects us