Building Bitcoin Smart Contracts with Taproot and BitVM: A Modern Approach to Logic Circuits

Introduction

Bitcoin’s Taproot upgrade (Nov 2021) radically improved privacy, efficiency, and script flexibility. With Schnorr signatures, MAST (Merkelized Abstract Syntax Trees), and script upgrades, Taproot enables new types of smart contracts — without increasing on-chain footprint.

BitVM (Robin Linus, Oct 2023) takes this further: it describes a protocol for arbitrary, Turing-complete off-chain computation with on-chain enforcement, leveraging Taproot’s advanced scripting. While the architecture is still early-stage, it enables, in theory, complex contracts (rollups, bridges, zk-proofs) on Bitcoin.

This article demonstrates real-world Taproot smart contract construction, discusses how logic circuits map to Taproot scripts, and points out best practices and caveats.
All code uses up-to-date, Taproot-aware Python libraries.

1. Taproot: What Changed?

• Schnorr signatures: Allow signature aggregation, making multisig cheaper and private.
• MAST: Complex contract scripts are committed in a Merkle tree; only the executed branch is revealed at spend time.
• Script upgrades: With Tapscript…