S16 E62: Abdel's Updates on Starkware & ZK STARKs Adoption

Abdel asked to come back, which is not how this show usually works. About three weeks before we went live he messaged to say he wanted another slot, and I spent those weeks wondering what he could add to the September episode. "We already discussed most of the stuff," I thought. He turned out to have a list, and it ran two and a half hours.

Abdel (Abdelhamid Bakhta, @AbdelStark) works on StarkWare and Starknet, is a co-author of EIP-1559 on the Ethereum side, and is behind Raito, a Bitcoin ZK client. This is his second appearance in Season 16 after S16 E44, and it follows my conversation with Alan Szepieniec of Neptune Cash.

I opened with a rant. Next month this show turns seven, and I had spent the morning skimming other Bitcoin podcasts, where "too many shows are trying to just provide reassurance" that the price is fine and the floor is in. Abdel agreed that the industry is "driven mostly by speculative stuff." Then we got to what he actually came to say: a proposal posted to two communities on the same day, a tour of BTCFi, a STARK proof verified in 25 milliseconds on a Raspberry Pi, and a long argument about how to migrate Bitcoin away from quantum risk.

A Testnet With a Market Cap

In September I had pushed Abdel to look at Zcash again. He admitted he had dismissed it years ago and never checked what changed, so he did his homework and talked to people around the ecosystem, Zooko among them. Then he ran an experiment. On the same day he posted an equivalent proposal on the Bitcoin developer forum and on Zcash's technical forum. (I asked whether the Bitcoin one went to the mailing list. It did not: that forum is where ideas get tested before they reach the list.) The goal was to compare the reaction, since I keep telling him Bitcoin has an ossification culture. His verdict: "the Zcash community showed much more appetite on the proposal and the proposal got much more traction than the one on Bitcoin."

The proposal is native STARK verification on the base layer. For Bitcoin that means a dedicated OP_STARK_VERIFY opcode, with the usual trade-off against a generic opcode like OP_CAT. For Zcash he found something better suited: TZE, the Transparent Zcash Extension, "a way to add new features to the base layer in a way that is more flexible and more simple than adding opcode." It is not live yet. With it, a Starknet-style layer 2 could settle on Zcash and give ZEC perps, DeFi and stablecoins. Core devs from Electric Coin immediately asked about block space and new DoS vectors, which are the same questions Bitcoin will ask later, so Abdel treats Zcash as a rehearsal.

I put it more bluntly: "This is what altcoins are for." Abdel's version was gentler ("It's a very interesting field of experimentation"), and he does not want the experiment to be the plan. "It has failed, in my opinion, if it's only a store of value," he said of Bitcoin. His position on scaling is pluralist: "I'm all for a world where there are many scaling solutions," from Lightning and Cashu to drivechains (my sponsor LayerTwo Labs is building those) and BitVM-based rollups.

Privacy Is Normal, Even at the SEC

I voiced my worry that Europe is heading toward forcing self-custody holders to disclose what they own, which hands attackers a spreadsheet of names, addresses and balances, in a place that already has wrench attacks and kidnappings. Abdel is French-speaking and shares the alarm: "They are killing freedom and they are putting citizens at risk." His answer is the one I like best: "We need to fight with tech." Layer 2 and application privacy are better than nothing, but he wants it at the base layer, and he came back to the slogan twice: "FGU is better than NGU," freedom go up over number go up.

The day before we recorded, Zooko had presented at the SEC roundtable on financial surveillance and privacy, and StarkWare's general counsel, Katherine, spoke there too, on ZK, quantum resistance and privacy. I hope institutions holding something private makes it politically safe for Bitcoin to add privacy someday. Abdel is more of a cypherpunk and does not want regulators' permission, but he sees the value: "it's not a substitute to continue going in the fully cypherpunk direction, but it can be a bonus at least."

He also relayed the objection from some Bitcoiners who oppose base-layer privacy, who prefer "full accountability of the supply on the base layer" and fear that moon math could hide a backdoor. His answer was more education and more people who can vouch for the systems, which are now better tested in production.

BTCFi Without the Suits

I had read about BTCFi on Bitcoin.com News (a sponsor, and an article dated September 30), and I wanted to know where the yield comes from, which is the question to ask about any yield. Abdel's pitch is to "make Starknet like the financial layer of Bitcoin." The first step uses wrapped BTC (WBTC, SolvBTC, LBTC), staked directly in Starknet's consensus layer, so the yield "comes from the classical inflation of the proof of stake mechanism of Starknet." He also said that "you do have the same risks of counterparty risk that those wrappers have in general." On top of that sit money markets for borrowing stablecoins against BTC, a Bitcoin-backed stablecoin called Uncap, and perps for the advanced crowd.

I noted that this means the Starknet token gets sold to pay Bitcoin depositors. He agreed, and described the hoped-for flywheel: more BTC, more capital-efficient strategies, more value for STRK. "But this flywheel, we need to demonstrate it in practice for now."

The trust-minimized path is a BitVM bridge, where "you need only one out of n operators to be honest," compared with the honest majority a federation like Liquid needs. For now he recommends Atomiq Labs, which does HTLC atomic swaps from Bitcoin or Lightning into Starknet, "the best way to bridge to Starknet because it does not require a third party." There is no KYC: "completely permissionless DeFi basically," with regulated institutional funds built on the same pieces. My disclosure was that nobody paid me to say this, and that it sounds like Hal Finney's Bitcoin-backed banks, minus the institution. On rug risk, his answer was short: "there is always some kind of risk."

The Bitcoin Cash Question

I asked the taboo question: Bitcoin Cash has big blocks, OP_CAT and OP_MUL, and is now exploring a ZK verifier, so wouldn't a rollup work better there? Citrea, I said, had told me privately that it would, but the users and the investors are on BTC. Abdel did not dodge: yes, technically it would be more efficient. But "you can always fork code, but you cannot fork more than a decade of people teaching freedom and sovereignty to people." He has also talked with Bitcoin Cash core devs, and he may play with it for fun, but he will not bet on it, because BCH antagonizes Bitcoin.

He is equally uneasy with Zcash marketing itself as encrypted Bitcoin, "the meme that I personally don't like, to be honest," even though he admits the HTTP versus HTTPS comparison works. His line in the sand: "anyone that is rooting for Bitcoin to fail is an enemy of freedom tech, period." Bitcoin, in his words, is "the best hope we have for humanity."

My own take is that Bitcoin Cash is a blackmail attack on Bitcoin, since miners with ASICs can switch chains if BTC stumbles, and that BTC should still learn from what BCH got right. On OP_CAT I said the version BCH restored is Satoshi's original, not the tamer Tapscript rewrite by "Heilman," whose first name I could not recall. Abdel supplied it: "Ethan."

Quantum: Anticipate, Don't Panic

Some investors are selling Bitcoin over quantum fears, and I floated my conspiracy theory that the fear is being amplified to justify freezing Satoshi's coins. Abdel was having none of the freeze: "I am against any measure that will include confiscating Satoshi's coins." If someone builds a machine that breaks elliptic curves, he said, the coins are the bounty, "a service for human progress in a way." He does not think the threat is here today, but because wallets, RPC endpoints and services all need to move, "I will not use the word urgency but I think we need to work on it right now." New designs should assume quantum from the start, and he named the Utreexo BIPs as an example.

STARKs are the family tool here: "they are quantum safe because they are relying only on the hash functions and not on elliptic curve cryptography." He recalled that people laughed at that design goal in 2018, and that he is discussing STARK-based signature aggregation with the BIP-360 people. (My conversation with Hunter Beast covers BIP-360 itself.) I added a caution about the Patoshi research by Sergio Demian Lerner, which people treat as gospel: nobody can be sure the coins are Satoshi's.

On migration, Abdel first favored successive soft forks with plenty of lead time. Quantum-safe signatures are big, and Bitcoin scales poorly, so he granted that "it's a very hard sell" and that opting in now would be premature. I argued that a hard fork is cleaner: bundle fixes, and leave a vulnerable chain behind as a canary, "while we already migrated to Noah's Ark." He drifted my way ("I actually also agree more and more now") and listed what a final bundle needs: privacy, quantum resistance, ZK verification and covenants. He drew the line at provenance: "it's not incompatible with keeping the provenance." At one point he said something I'd said touched his current focus, then added, "I cannot share it now."

The Cat, the Maxis and the Builders Who Leave

Last year there was something close to consensus on OP_CAT and CTV, and the Great Script Restoration was a nice idea. Then we got Knotzis versus Coretards. I brought up The Cat, a proposal under which "all UTXOs smaller than 1,000 satoshis should basically get frozen or confiscated." I think it is silly, and worse, a precedent. My second conspiracy theory is that institutions fear Satoshi's coins hitting exchanges, so they would like Bitcoin to get used to being confiscatable. Abdel, who listened more patiently than I would have: "I'm not laughing at your conspiracy theory because it's exactly my point." He thinks the store-of-value camp benefits most from the status quo, and that the proposal killed momentum on covenants.

That is why builders drift to Zcash. I put it badly: "you're really trying to get a girl and she ignores you you talk to her friend." Abdel understands the strategy and admits he is doing it too, but worries about "the message being lost in translation." The aim is to improve Bitcoin, not to leave it. He also thinks slow Bitcoin has an upside for the social layer: "it's actually a good property that Bitcoin is moving slowly."

He turned the test back on Zcash. Now that it has a spotlight, "now is actually the time to prove the thesis that Zcash can be what Bitcoin should have been," because "it's easy to innovate when the project is not working." I added that Ethereum started out friendly to Bitcoin (there was once a cartoon of the two shaking hands) and that its existence has helped Bitcoin on development and regulation. Abdel's version of the same grievance: "Why would you build an L2 where the people on the L1 dismiss you they don't care about you?"

Lightning Retires to the Back Office

My argument was that earlier bull markets ran on technology: the scaling wars and Ethereum in 2017, SegWit and the Lightning promise, and a lot of Lightning building in 2021. Now the signal is odd: "if the bad news are still bringing the price down, but the good news are not affecting the price, we have a problem." I remember running a Lightning node on a Raspberry Pi in 2021, until people said Pi routers slow the network and you should just use an LSP.

Abdel's read is that "Lightning became more like some kind of B2B tech," an interop layer between Cashu, Liquid and Ark, "the global language of the Bitcoin economy." Retail suffers from channel management and the burden of running a node.

Then we got to Bitcoin treasury companies. A business whose only business is owning Bitcoin and borrowing to buy more reminds me of the Seinfeld pitch for a show about nothing. Abdel does not know the episode ("I'm just an anime guy") but offered a definition: "I think Bitcoin standard company is more a company that will use Bitcoin for its financial operations," meaning salaries, customer payments and supplier bills, not an investment vehicle.

Sixteen Years in 25 Milliseconds

I have been waiting for Eli Ben-Sasson's old pitch: sync the Bitcoin chain by verifying one proof. Abdel pointed out that it exists: "this is your moment now." Using Raito, "not in one second, in 25 milliseconds on a Raspberry Pi." The proof covers the whole mainnet header chain, "So not the block body, to be clear." Generating it takes a cloud machine with 128 gigabytes of RAM, but verifying it needs almost nothing, so the work gets done once and everyone else just checks. (Abdel dated Eli's original pitch to a San Jose conference in 2013.)

He shared his screen to show how it could work in a block explorer like mempool.space: replace "trust me bro" with a button that verifies the proof in your browser. The console log did not make it onto the stream, so you will have to take his word, which is a bit ironic. Wallets are the better target, because a proof carries everything needed for inclusion, which means better SPV and light clients. "It does not require any change to Bitcoin for that."

Abdel asked for an introduction to Thomas Voegtlin of Electrum, who was on the show, and I said I would try. For a wallet that already hides complexity, he recommended Bull Bitcoin, which picks among Liquid, Lightning and on-chain depending on the amount. I like what they are doing too, though I will not be sponsored by them.

One Wand, a Short List and Freedom Tech

My magic wand question: one change to Bitcoin, everyone runs it. Abdel is biased, he said, and chose "native ZK verification because yeah, I believe it can bring a lot," since it serves quantum, privacy and scaling at once. If ZK were off the table he would pick privacy, which needs ZK anyway.

I also wanted his legit altcoins. His definition: none is "a competitor on Bitcoin," the people are mission driven, and the tech is serious. He named Zcash, Ethereum, Aztec, Citrea and Alpen Labs (neither has a token, I pointed out), and Monero. Of Starknet he said, "I cannot name Starknet," and made the effort not to. He passed on Kaspa because "Kaspa is more like sold as like better Bitcoin, which is something that I don't like," and on Litecoin: "I don't think it is bringing any meaningful value to the world," fair launch or not. I defended the principle that altcoins let the free market test things Bitcoin is not ready for, and my mentions will tell me what I think of this list.

In the last stretch Abdel described freedom tech beyond money, with "Nostr is what Bitcoin is to money, for communication," plus BitChat and Cashu, all of which he wants to combine with ZK. He has more to announce on Starknet privacy and says he can only offer "an announcement of announcements" for now. For the listeners who made it to the end, the password was FGU.

For the quantum migration debate, the companion episode is Hunter Beast on Bitcoin's quantum resistance and BIP 360, and the STARK backstory is in Eli Ben-Sasson on STARKs, rollups and privacy.