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BIP-XXXX: Programmable Bitcoin Token Standard (PBTS)

BIP: XXXX
Layer: Applications
Title: Programmable Bitcoin Token Standard (PBTS)
Author: Gobi Shanthan <[email protected]>, Lee Raj. <[email protected]>
Comments-Summary: No comments yet.
Comments-URI: https://github.com/bitcoin/bips/wiki/Comments:BIP-XXXX
Status: Draft
Type: Standards Track
Created: 2025-02-11
License: BSD-2-Clause
Discussions-To: [email protected]
Post-History: 2025-02-11
Requires: 340, 341, 342

Abstract

The Programmable Bitcoin Token Standard (PBTS) introduces a method to create, transfer, and validate native Bitcoin-based tokens using Bitcoin Script and Taproot. PBTS enhances Bitcoin's Layer 1 functionality by enabling tokenized assets with programmable conditions without compromising security, decentralization, or predictability. Unlike Ethereum or Solana, PBTS does not introduce Turing-complete smart contracts but leverages structured pre-commitments and Taproot optimizations to enable secure, efficient programmable tokens.

PBTS is a non-consensus-breaking, backward-compatible standard that ensures tokens remain verifiable and transferable without requiring modifications to Bitcoin's core protocol.

Copyright

This BIP is licensed under the BSD 2-clause license.

Motivation

Bitcoin adheres to the principles of minimalism and security, which have made it the most robust and decentralized blockchain. PBTS aligns with this philosophy by introducing programmability without complexity, ensuring that Bitcoin's core remains unchanged while extending its utility in a predictable and efficient way.

Bitcoin currently lacks a native token standard that enables flexible and fully Layer 1 token issuance with programmable conditions. Existing solutions such as Ordinals, RGB, and Runes either rely on external tracking mechanisms or Layer 2 solutions that introduce centralization risks. PBTS provides a UTXO-based, predefined, and non-intrusive method for issuing tokens that remain completely verifiable on Bitcoin's base layer with advanced programmable features like time-locked vesting and milestone-based escrow.

Key Benefits

  1. No Additional Layers

    • Execution happens directly in Bitcoin transactions
    • Complete validation on Layer 1
    • No external dependencies for validation

  2. Predefined & Deterministic Execution

    • No infinite loops or dynamic state modifications
    • Predictable execution paths
    • Fixed state transitions

  3. Minimal Impact

    • Utilizes existing Taproot and Script functionality
    • No consensus changes required
    • Standard transaction format

  4. Scalability & Efficiency

    • Merkle proof-based validation
    • Minimal transaction sizes through Taproot optimization
    • Compatible with future Bitcoin scaling solutions

  5. Security Model

    • No external validators required
    • Fully self-custodial
    • Bitcoin-native security

  6. Programmable Conditions

    • Time-locked transfers (vesting)
    • Milestone-based escrow with multiple release stages
    • Multi-signature requirements
    • Prepared for oracle integration

Comparison with Existing Bitcoin Token Standards

Feature Ordinals Runes PBTS
UTXO-Based ❌ No (Inscriptions) ✅ Yes ✅ Yes
Requires External Indexer? ✅ Yes ✅ Yes ❌ No
Efficient for Tokens? ❌ No ✅ Somewhat ✅ Fully Optimized
Scalability Impact ❌ High Blockchain Bloat ⚠️ Medium ✅ Minimal (Uses Taproot)
Bitcoin Script-Based? ❌ No ✅ Yes ✅ Yes (Taproot-Optimized)
Consensus Changes Required? ❌ No ❌ No ❌ No
Transaction Cost ❌ Expensive ⚠️ Medium ✅ Efficient
Programmable Conditions ❌ No ⚠️ Limited ✅ Yes
Fully On-Chain Validation ❌ No ❌ No ✅ Yes

Specification

Overview

PBTS tokens are created, transferred, and validated directly on Bitcoin's Layer 1 using Taproot scripts to enable complex programmable conditions without requiring any modifications to the Bitcoin protocol.

Token Creation

A PBTS token is created by locking a UTXO with a Taproot script that commits to a token issuance structure. The token metadata is encoded in the transaction output using a standardized format:

  1. Token Issuance Format:

    • The output script is a Taproot output that contains:
      • Token ID: A 32-byte identifier (Hash of Issuer's Public Key + Script Hash)
      • Total Supply: Fixed integer representing the maximum possible supply
      • Decimals: Integer representing the decimal places (typically 8 to match satoshis)
      • Metadata Commitment: Optional hash of off-chain metadata (name, symbol, description)

  2. Example Issuance Script:

<token_metadata_hash> OP_DROP
<issuer_pubkey> OP_CHECKSIG

Token Contracts

PBTS supports several programmable contract types that define how tokens can be transferred and under what conditions they can be spent:

1. Auto-Vest (Time-Locked) Contracts

Time-locked transfers where tokens become available to the recipient only after a specific date, using Bitcoin's CHECKLOCKTIMEVERIFY opcode.

Script Pattern:

IF
    <locktime> OP_CHECKLOCKTIMEVERIFY OP_DROP
    <receiver_pubkey> OP_CHECKSIG
ELSE
    <issuer_pubkey> OP_CHECKSIG
ENDIF

2. Milestone-Based Escrow

Structured transfers with multiple release stages, each requiring specific conditions like time thresholds and multi-signature approvals.

Script Pattern:

IF
    # Milestone 1
    <milestone1_locktime> OP_CHECKLOCKTIMEVERIFY OP_DROP
    <m1> <pubkey1> <pubkey2> <pubkeyN> <n> OP_CHECKMULTISIG
ELSEIF
    # Milestone 2
    <milestone2_locktime> OP_CHECKLOCKTIMEVERIFY OP_DROP
    <m2> <pubkey1> <pubkey2> <pubkeyN> <n> OP_CHECKMULTISIG
ELSEIF
    # Expiry condition (return to sender)
    <expiry_time> OP_CHECKLOCKTIMEVERIFY OP_DROP
    <sender_pubkey> OP_CHECKSIG
ENDIF

3. Oracle-Ready Contracts

Contracts designed to work with external data oracles, containing placeholder structures for future oracle implementation.

Script Pattern:

IF
    # Oracle verification
    <oracle_pubkey> OP_CHECKSIGVERIFY
    <condition_hash> OP_SHA256 <expected_result_hash> OP_EQUALVERIFY
    <receiver_pubkey> OP_CHECKSIG
ELSEIF
    # Expiry condition (return to sender)
    <expiry_time> OP_CHECKLOCKTIMEVERIFY OP_DROP
    <sender_pubkey> OP_CHECKSIG
ENDIF

Token Transfer

PBTS token transfers involve creating transactions that spend from token-containing UTXOs and create new UTXOs with the appropriate scripts to maintain token properties and conditions.

  1. Standard Transfer:

    • Spends from a token UTXO
    • Creates new outputs with token metadata preserved
    • May split tokens across multiple outputs (for partial transfers)

  2. Conditional Transfer:

    • Creates outputs with Taproot scripts encoding the conditional logic
    • Enables time-locked, multi-signature, or other programmable conditions

  3. Transaction Validation:

    • Follows standard Bitcoin transaction validation rules
    • Leverages Bitcoin's native UTXO model for tracking ownership
    • Enables verification without external indexers or oracles

Implementation Details

Taproot Integration

PBTS leverages Taproot's script path spending to enable complex script execution while maintaining payment efficiency:

  1. Key Path Spending:

    • Used for standard transfers with no conditions
    • Minimizes transaction size and fees

  2. Script Path Spending:

    • Used for conditional transfers (time locks, multi-sig, etc.)
    • Reveals only the relevant script path when executing

  3. Commitment Structure:

    • Main output key commits to all possible spending paths
    • Each condition is a separate script leaf in the Taproot tree

On-Chain Token State Tracking

PBTS tokens maintain their state entirely on-chain:

  1. Token Properties:

    • All token properties are verifiable through transaction outputs
    • Token metadata is committed via hashes in the script structure

  2. Ownership Tracking:

    • Token ownership is represented by control of the corresponding UTXOs
    • Standard Bitcoin wallet functionality can be used to track and manage tokens

Security Considerations

PBTS mitigates various attack vectors through:

  1. Double Spending Prevention:

    • Each token is tied to a specific UTXO
    • Standard Bitcoin consensus rules prevent double-spending

  2. Replay Attack Protection:

    • Uses unique script conditions for each transfer
    • Includes sequence numbers where appropriate

  3. Fee Optimization:

    • Taproot implementation minimizes transaction sizes

  4. Predictable Execution:

    • No dynamic loops or unpredictable execution paths
    • All contract conditions are pre-defined at creation time

  5. Time-Based Security:

    • Uses CHECKLOCKTIMEVERIFY to enforce time constraints
    • Ensures time-locked funds cannot be spent prematurely

Prerequisites

  • Bitcoin Core v28.1.0+ with RPC enabled
  • Go 1.16 or newer
  • A Bitcoin testnet or mainnet wallet with funds

Basic Usage

# Issue a new token
./pbts issue "Programmable Bitcoin Token" "PBTS" 8 1000000000

# List all tokens
./pbts list

# Create a time-locked vesting contract
./pbts vest <token_id> <sender_pubkey> <receiver_pubkey> <amount> <unlock_date>

# Create a milestone-based escrow
./pbts milestone <token_id> <sender> <receiver> <arbitrator> <amount> <milestone_count> \
  <milestone1_percentage> <milestone1_unlock_date> <milestone1_expiry_date> <milestone1_required_sigs> \
  <milestone2_percentage> <milestone2_unlock_date> <milestone2_expiry_date> <milestone2_required_sigs>

Examples

Time-Locked Vesting Contract

A successful time-locked vesting contract implemented on Bitcoin testnet:

./pbts vest 6ad138104a19ad3711a3ae6ec251f0c2 0234f63fb0b8acefb738a83f276ad6e5d18ec71613965c3f639f4158c3b07db1f4 03a7bd1d77432d2267813c908dca7ec7382a41a21a5da9e12d3726e63aae58bde3 10 2025-03-03

Generated Output:

🔄 Creating auto-vesting transfer of 10.000000 tokens (ID: 6ad138104a19ad3711a3ae6ec251f0c2) to 03a7bd1d77432d2267813c908dca7ec7382a41a21a5da9e12d3726e63aae58bde3 (unlocks at: 2025-03-03T00:00:00Z)...
Adjusting unlock time to ensure it's in the future: 2025-03-03T23:19:02-05:00
Created Taproot address: tb1pkcvzu54pey9sjrj5qeu7xnvppe5k3w34spv7yhtfxxg56uyscsuq4uah44
🏦 Auto-Vest Address: tb1pkcvzu54pey9sjrj5qeu7xnvppe5k3w34spv7yhtfxxg56uyscsuq4uah44 (unlocks at: 2025-03-03T23:19:02-05:00)
✅ Auto-vest transfer transaction broadcasted! TXID: 8c64767e003ed0b5786be07dac35b48eb32e53095af7802d5179808c36e7869d

This transaction (TXID: 8c64767e003ed0b5786be07dac35b48eb32e53095af7802d5179808c36e7869d) demonstrates a successful time-locked contract on Bitcoin testnet using Taproot functionality.

Backward Compatibility

PBTS is fully backward compatible with the existing Bitcoin protocol. It:

  1. Uses standard Bitcoin transactions
  2. Leverages existing opcode functionality
  3. Does not require any consensus changes
  4. Can coexist with other token standards

Test Vectors

[To be added in future update]

References