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Rootstock = Ethereum + Bitcoin: EVM, Sidechains, and Smart Contracts

Published on: 24 April, 2024

Rootstock is Bitcoin’s first and longest-running sidechain — but why is this network needed, and what does it deliver to the crypto community?

To explore all this, RootstockLabs launched a new podcast called Rootstock Fundamentals. The show is designed to be the ultimate beginner’s guide — and features interviews with key contributors to the Rootstock ecosystem.

Joining our debut episode is Rootstock co-founder Adrian Eidelman, who has spent almost 10 years bringing this ecosystem to life.

Listen to the full episode on YouTube.

In conversation with RootstockLabs CEO, Daniel Fogg, Adrian kicks off with an elegant explanation of what a sidechain is.

“Sidechains are basically technology to extend the capabilities of Bitcoin,” he says. “In the case of Rootstock, those new capabilities are around smart contracts — but it could be anything like faster blocks and privacy. The idea is to unlock things that Bitcoin cannot do.” 

Rootstock is compatible with the Ethereum Virtual Machine, and that means smart contracts written and deployed on Ethereum using the Solidity language can be rolled out to Rootstock without developers needing to make any significant changes to the code.

“We didn’t want developers to have to learn something new in order to build on Bitcoin with Rootstock,” Adrian explains. “The idea was to try to leverage their experience — the tools they were using and the programming language they already knew.”

It’s not a competition with Bitcoin

While Bitcoin isn’t Turing complete, the Rootstock Virtual Machine is — and this allows brilliant, complex things to be built on top of the world’s securest blockchain. 

“I think that sits at the heart of the argument around why Rootstock exists,” Daniel says. “Bitcoin is better than anything else in the world at two or three things. But perhaps the ability to store value and transfer value is not enough to build a global, decentralized economy. That’s where having a true and complete blockchain that is able to directly interface with the Bitcoin blockchain is a perfect combination of these two different computational paradigms.”

Adrian praises Ethereum for its innovation — and said Rootstock’s goal was to deliver this infrastructure to Bitcoin. “It’s amazing all the things you can do with smart contracts. There was no good reason not to build that on top of Bitcoin, which is the most decentralized and censorship-resistant store of value. Why would you compete with Bitcoin? Why don’t you just bring all this amazing innovation into Bitcoin? That was basically the vision we had back in the day, and I think it’s still valid today.” 

Is Rootstock a true layer 2?

Before digging into whether Rootstock is a true layer 2 or not, it is important to understand what makes a blockchain a layer 2 in the first place. 

According to Adrian, some other projects fail to meet the definition of being a Bitcoin Layer 2 blockchain because they issue tokens that compete directly with BTC — but Rootstock is different because its native currency is RBTC, an asset that’s pegged 1:1 with Bitcoin and allows users to interact with a plethora of protocols and dApps.

“There is no competition with Bitcoin — and there is full alignment in goals and incentives when we talk about Rootstock. BTC is back and forth between the two chains. Another strong point of connection comes from the incentives in the network.” 

One such incentive is merge mining, which means Rootstock is secured using the same computational resources as Bitcoin.

“The idea is very simple to understand,” Adrian says. “Rootstock reuses the hashing power that is securing Bitcoin to secure Rootstock at the same time. The idea is that no additional electricity and no additional equipment are required. We can reuse resources with no impact to Bitcoin — and miners can get additional revenue streams.” 

Rootstock’s mining difficulty is lower — primarily because it has a block time of 30 seconds compared with 10 minutes on Bitcoin. And while other merge-mined blockchains do exist, Rootstock is by far the largest network to deploy this successfully.

Understanding Rootstock’s mechanisms: the PowPeg

The two-way peg that allows BTC and RBTC to be converted so seamlessly is powered by a protocol called the PowPeg.

This multi-layered design ensures that no single entity or group has control over locked-up Bitcoin.

“When you have this kind of bridge you will have different signatories that hold the key to the vault, right? To where those Bitcoins get locked, right? In general, there is a set of keys that can basically release the Bitcoins back into L1.”

One of the most distinctive characteristics of the PowPeg are hardware devices called PowHSMs that protect private keys and eliminate the need for human control. As a result, transactions can no longer be manually signed — and private keys cannot be extracted or backed up, even in encrypted form.

A time-locked, emergency multisig is also in place should these devices experience issues — ensuring that BTC never becomes permanently inaccessible.

Adrian continues by explaining how these private keys remain private: “How this works in Rootstock is that those keys are not held by individuals or entities, but are actually kept inside our security modules, similar to what we usually use to keep our cryptos, like a ledger device or similar in the case of Rootstock, those are mainly ledger devices.

And of course, these devices are tamper-proof. So that basically means that you cannot extract the private key from them.” 

“So that’s kind of the first evolution of the Rootstock two-way peg; when we introduced these hardware security modules to secure those keys.”

The first Bitcoin layer 2: Born in a small cafe in Buenos Aires 

Adrian first got into Bitcoin in 2013 after being “orange pilled” by a business partner — and he began working on Rootstock in 2015 with friends and colleagues in Argentina.

“We all got excited about Bitcoin,” he says. “It was a very, very small team at the beginning.”

They would gather for breakfast once a week at a cafe in Buenos Aires called Torino — and the coffee shop had so much influence on the early days of the project, it was almost used as the name for Rootstock. 

Fast forward to now — and hundreds of people have been involved in bringing Rootstock to life, making it a collective success. Determined developers and passionate entrepreneurs have come together to push the boundaries of what’s possible on Bitcoin — broadening access to DeFi protocols and boosting financial inclusion in the process.

Today Rootstock keeps the legacy of being the first, longest-lasting, and biggest Bitcoin layer 2 to exist today. It is open-source, EVM-compatible, and secured by over 60% of Bitcoin’s hashing power, which makes it a gateway to a vibrant ecosystem of dApps that continues to evolve to become fully trustless.


Listen to the full episode of Rootstock Fundamentals with Daniel and Adrian here — and stay tuned for more interviews coming soon on Spotify.