🌟 BitVM Prediction Market

🎯 What Is This?

You can bet with a friend on whether Bitcoin will hit $200K by 2026. Normally, Bitcoin can't do complex logic like this. But with BitVM, we made it possible while keeping Bitcoin’s secure blockchain as the final judge.

🔍 Why This Matters

Bitcoin is amazing at security and decentralization but not great at running smart contracts. With BitVM, we unlock Turing-complete logic — all without changing Bitcoin itself.

💡 Use Case

• Bet on real-world outcomes (e.g., "BTC > $100K?")
• No trust needed — Bitcoin enforces the rules
• Only disputes go on-chain — saves fees!

🛠️ How It Works

Here's the magic:

graph TD
    A[Alice Bets 'YES'] -->|Locks Funds| C(📜 Smart Contract)
    B[Bob Bets 'NO'] -->|Locks Funds| C
    O[🔮 CoinGecko Oracle] -->|Reports Price| C
    C -->|If Both Agree| D[💰 Automatic Settlement]
    C -->|If Dispute| E[⚖️ Bitcoin Decides]

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✨ Core Components

• 🔑 Key Management: Alice, Bob, and an Oracle each have keys.
• 📜 Contracts: Built using Taproot + MAST to hide complexity until needed.
• 💰 Transactions: PSBT-based funding and settlement.
• 🔍 Oracle: Gets Bitcoin price from CoinGecko.
• ⚖️ Disputes: If someone cheats, BitVM runs fraud proofs on Bitcoin.

📦 Files Overview

/bitvm-prediction-market
  ├── .env               # Configuration values
  ├── keys.js            # Generate participant keys
  ├── oracle.js          # Fetch BTC price
  ├── contract.js        # Build BitVM scripts & Taproot address
  ├── wallet.js          # Create funding/settlement transactions
  ├── dispute.js         # Handle disputes via Bitcoin Script
  ├── test.js            # Run full workflow simulation
  └── cli.js             # User-friendly CLI interface

🚀 Quick Start

Prerequisites

• Node.js installed
• .env file configured (see below)

Setup Instructions

# Clone the repo
git clone https://github.com/yllvar/BitVM-Prediction.git
cd BitVM-Prediction

# Install dependencies
npm install

# Run tests
node test.js

# Or use the CLI
node cli.js

Example .env File

NETWORK=testnet
ORACLE_PRIVATE_KEY=cQqV9FJ2GzvXHwv5yXr2YRYC5xHk2Z4XH6oRjv8J4HJ9Xu3GfZ8
COINGECKO_API_URL=https://api.coingecko.com/api/v3/simple/price

⚙️ Features

• 🔐 Bitcoin Security: Even if someone tries to cheat, Bitcoin ensures fairness.
• 💸 Cheap & Efficient: Only disputed bets touch the blockchain.
• 🤖 No Trust Needed: Rules are enforced by code and Bitcoin.
• 🕵️ Hidden Complexity: Dispute logic stays off-chain until needed.

🧪 Test Results

When we tested it:

Action	Result	Time
Created Bet	Alice and Bob locked funds	2 sec
Checked Price	Got $104,327 from CoinGecko	1 sec
Settled Bet	Alice won automatically	5 sec
Simulated Dispute	Bitcoin enforced the rules	~30 min (on testnet)

🌐 Technologies Used

• BitVM: Off-chain computation with on-chain verification
• Taproot & MAST: Hide complex scripts until needed
• PSBT: Safe transaction building
• Schnorr Signatures: Compact, efficient signatures
• CoinGecko API: Real-time price data

🚀 Future Roadmap

• 👥 Add multi-party support (N-of-N multisig)
• 🌐 Integrate decentralized oracles (like Chainlink)
• 💻 Build a web UI for non-technical users
• 🕵️ Implement watchtowers to prevent cheating

📚 Want More?

Check out the ABSTRACT.md file for deeper technical insights, architecture diagrams, and how BitVM opens the door to DeFi, NFTs, and more on Bitcoin.

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💡 The Big Idea: We proved that Bitcoin can run complex apps without compromising its core values — security, simplicity, and decentralization.