They have created a minimal Layer 2 (L2) infrastructure that enables the construction of zero-knowledge applications (zkapps) on the Bitcoin network. The key aspect of this system is its operation without the need to verify zero-knowledge proofs directly on Bitcoin, which is currently unfeasible without additional opcodes. Instead, the solution employs multi-party computation (MPC) among nodes to oversee a wallet that tracks both zkapps and their respective states if they are designed to be stateful.

One of the innovative features of this approach is the lightweight nature of MPC nodes; these nodes do not require knowledge of the Bitcoin canonical chain. This attribute allows them to operate with minimal resources, and they could potentially be integrated into trusted execution environments to bolster security.

The project aims to recruit prominent experts in the zero-knowledge field to operate nodes, enhancing the robustness of the L2. A larger threshold parameter is sought, which would necessitate more nodes to be compromised for an attack to succeed, thereby increasing security. At present, this system is operational on a testnet environment.

This breakthrough offers users the ability to engage with protocols such as zkLogin or zkMail, allowing them to lock their Bitcoin within a zkapp and subsequently unlock it through a proof of login on external services like Google or by proving the receipt of an email. For those interested in exploring this cutting-edge technology, the command-line interface (CLI) can be accessed via the GitHub repository at sigma0-xyz/zkbitcoin.

This L2 innovation is noteworthy for being the first of its kind, providing novel capabilities and applications for Bitcoin that leverage zero-knowledge proofs without the necessity of protocol changes on the Bitcoin network itself.