Zero-Knowledge Scaling and Bitcoin’s Governance Crossroads

Briefing Notes contain: (1) a summary of podcast content; (2) potential information gaps; and (3) some speculative views on wider implications for Bitcoin. Most summaries are for Bitcoin-centered YouTube episodes but I also do some on AI and technological advance that spill over to affect Bitcoin.

Summary

The June 10, 2025 episode of the Isabel Foxen Duke Podcast features Eli Ben-Sasson explaining how Zero-Knowledge Scalable Transparent Arguments of Knowledge (ZK-STARKs) offer massive scalability, remove trusted setup, and provide post-quantum security for future settlement layers. He details how StarkEx and Starknet demonstrate industrial-scale validity proof systems and outlines the technical gaps that must be resolved for Bitcoin integration. His analysis underscores how opcode upgrades, governance agility, and the rise of custodial ETFs will determine whether Bitcoin retains long-term self-custodial relevance.

Take-Home Messages

1. STARK Scaling: ZK-STARKs deliver major performance gains and eliminate trusted setup, enabling high-volume systems anchored to base-layer security.
2. Bitcoin Opcodes: Script constraints hinder STARK verification, making OPCAT and arithmetic opcode proposals central to future scalability.
3. Governance Inertia: Multi-year gaps between soft forks create uncertainty about Bitcoin’s ability to adopt critical security and scaling upgrades.
4. Custodial Dominance Risk: Absent trust-minimized L2s, ETFs and custodial rails may become the default transaction layer for mainstream users.
5. Quantum Migration Imperative: Vulnerabilities in existing signature schemes heighten the need for a proactive, orderly post-quantum upgrade pathway.

Overview

Ben-Sasson traces how early academic research on interactive proofs and zero-knowledge (ZK) systems intersected with Bitcoin’s trajectory in 2013. He recounts how Greg Maxwell immediately recognized the potential of validity proofs for scaling and how this laid groundwork for Zcash, which delivered strong privacy but relied on trusted setup and quantum-vulnerable cryptography. These early developments show how research breakthroughs shaped practical deployments, while also revealing technical limitations that continue to matter for Bitcoin today.

He introduces ZK-STARKs as a new generation of ZK proofs designed to fix the shortcomings of earlier constructions. STARKs remove trusted setup, depend on hash-based assumptions, and provide resilience against anticipated quantum threats. Ben-Sasson explains that these properties make STARKs suitable for high-throughput applications requiring verifiable computation anchored to a secure base layer.

He then describes how StarkEx and Starknet demonstrated these ideas at scale within the Ethereum ecosystem. StarkEx processed more than a trillion dollars in settlement value, offered significant fee reductions, and enabled a range of applications from DeFi to NFTs. Starknet extends this approach by providing a general-purpose execution environment while relying on Ethereum for settlement, showing how validity proofs can operate as a dependable scaling method.

Finally, Ben-Sasson outlines a pathway for integrating STARK-based systems with Bitcoin. He argues that ordinals, inscriptions, and runes illustrate clear user demand for richer functionality anchored to Bitcoin’s security. He notes that progress depends on a small set of additional opcodes and more predictable governance, which would allow Bitcoin to verify validity proofs, support advanced Layer 2 architectures, and prepare for post-quantum upgrades.

Stakeholder Perspectives

1. Bitcoin core developers: Weighing safety risks, maintenance burden, and consensus stability when evaluating new opcodes.
2. Layer 2 architects: Seeking pathways to anchor high-throughput STARK-based systems to Bitcoin while navigating Script limits.
3. Institutional custodians: Assessing how scaling stagnation may entrench ETF-based Bitcoin exposure as a primary gateway.
4. Regulators and policymakers: Monitoring how zero-knowledge systems affect transparency, market integrity, and systemic risk.
5. Self-custody advocates: Balancing the benefits of expressive L2s with concerns about governance delays and long-term sovereignty.

Implications and Future Outlook

Bitcoin’s capacity to adopt new opcodes will determine whether trust-minimized, validity-proof-based scaling becomes viable. If Bitcoin Script remains constrained, developers may shift advanced applications to other chains, limiting Bitcoin’s role in high-value computation. Institutions and policymakers will monitor whether this conservatism fortifies reliability or diminishes functional relevance.

The scalability demonstrated by StarkEx and Starknet suggests that Bitcoin could anchor large and diverse application ecosystems if verification becomes affordable on-chain. This pathway would allow Bitcoin to function as a secure settlement layer for high-throughput systems while preserving user sovereignty. Achieving it requires governance processes that support timely evaluation of opcode proposals and credible plans for post-quantum migration.

ETF expansion raises the possibility that custodial infrastructures become the dominant transaction layer if Bitcoin does not scale through trust-minimized methods. This outcome could reduce user control, increase regulatory leverage over intermediaries, and redirect innovation toward other ecosystems. Over the next decade, adoption patterns will hinge on whether Bitcoin incorporates the minimal cryptographic primitives needed to support zero-knowledge scalability.

Some Key Information Gaps

1. What minimal set of new opcodes, including OPCAT and arithmetic primitives, is required to verify STARK proofs efficiently on Bitcoin Script? Understanding the exact requirements is essential for evaluating feasible soft-fork designs and long-term scaling paths.
2. What decision processes or norms would allow the Bitcoin community to evaluate and adopt soft forks for scaling and quantum readiness within reasonable timeframes? Clear governance mechanisms would help global stakeholders coordinate around necessary upgrades.
3. Under what conditions would Bitcoin realistically become dominated by ETF and custodial products, making self-custodial use marginal? Identifying these thresholds can guide policy interventions and decentralization efforts.
4. What migration paths could move Bitcoin from current signature schemes to post-quantum-secure constructions such as STARK-based signatures without mass key exposure? A safe transition plan is vital to avoid crisis-driven changes under emerging quantum threats.
5. Which bridge designs most effectively combine validity proofs, BitVM-style constructions, and covenants to minimize trust in intermediaries for Bitcoin–Starknet transfers? Establishing robust architectures will determine whether cross-chain flows remain permissionless and secure.

Broader Implications for Bitcoin

Bitcoin’s Position in a ZK-Centric Economy

As global financial systems incorporate verifiable computation, networks that integrate efficient ZK verification will anchor high-value settlement and application layers. Bitcoin’s ability to support minimal primitives for STARK verification will shape whether it remains a foundational settlement environment or yields that role to more adaptive ecosystems. Over the next five years, competition between networks will increasingly center on which can combine security, scalability, and ZK readiness.

Post-Quantum Credibility and Reserve Asset Viability

Long-term confidence in digital monetary systems will hinge on credible pathways toward post-quantum security. If Bitcoin articulates a clear migration path, it strengthens its standing as a durable reserve asset for institutions and sovereign wealth strategies. Networks lacking such clarity may face credibility discounts as quantum research progresses and regulatory expectations evolve.

Governance Adaptability as a Determinant of Economic Function

The pace at which a network can safely integrate new cryptographic primitives will influence its economic relevance. Bitcoin’s historically cautious governance may protect against certain risks but could also slow adoption of essential upgrades if processes remain ad hoc. Over time, adaptability in governance frameworks may become as strategically important as the underlying technical design.

Multi-Network Asset Mobility and Liquidity Formation

Validity-proof-based bridges offer secure methods for moving assets across ecosystems without relying on custodial intermediaries. As these bridges mature, Bitcoin’s role within multi-chain architectures will influence liquidity patterns, pricing dynamics, and the distribution of financial activity. If Bitcoin enables minimal verification functionality, it can remain central to cross-chain settlement; if not, liquidity may consolidate elsewhere.

The Future Structure of Digital Ownership and User Sovereignty

The long-term balance between custodial and self-custodial models will shape digital property rights across jurisdictions. ZK scaling provides a pathway for high-throughput self-custodial systems that preserve user autonomy while enabling complex applications. Decisions about opcodes, governance agility, and post-quantum migration will direct how digital ownership is distributed between individuals, institutions, and automated systems.