TL;DR
A small but influential group of developers working on scaling Bitcoin has spent the last few months exploring a cryptographic concept known as Garbled Circuits. Most notably, teams at RootstockLabs, Fairgate, and Alpen Labs.
As someone from a non-technical background, a lot of this goes over my head. That’s why the goal of this article is to explain Garbled Circuits as simply as possible. I’ll also start to explore why combining Garbled Circuits with Bitcoin could be huge.
Bitcoin is the financial infrastructure of the future
Bitcoin gave us the most secure, decentralized, and censorship-resistant ledger the world has ever seen, but it wasn’t designed for rich programmability or privacy. This is a problem that RootstockLabs has been working on solving since 2015 with the design and launch of Rootstock, Bitcoin’s DeFi Layer, and RIF, a token and tools to accelerate BTCFi adoption..
But as Bitcoin and Rootstock continue to evolve to support increased demand and more advanced applications, we need new cryptographic building blocks that enable secure, private, multi-party computation.
First, a primer on MPC
Garbled Circuits is part of a family of cryptographic techniques known as Multi-Party Computation (MPC). As the name implies, MPC allows multiple parties to compute something but without revealing their private inputs to each other.
In a nutshell, MPC lets people and organisations collaborate securely and privately. No one has to trust anyone else with their data. Instead, each party contributes encrypted inputs, and the computation happens over encrypted data.
MPC is a broad term for many different protocols and techniques, each with strengths and weaknesses:
- Secret Sharing splits data into parts and distributes it among participants.
- Homomorphic Encryption allows computations on encrypted data.
- Garbled Circuits (the focus of this blog) turn a program into a kind of encrypted puzzle that can be solved jointly but privately.
Garbled Circuits: A lost cult classic
Garbled Circuits was invented by Andrew Yao in the 1980s, thirty years before Bitcoin was even a twinkle in Satoshi’s eye. A powerful protocol that originally allowed two parties to jointly compute a result without revealing their private inputs.
A brief explainer on how Garbled Circuits originally functioned.
Over the years, variants and extensions of Yao’s protocol have been developed to support multi-party settings, allowing more than two parties to participate.
In the pre-Bitcoin era, Garbled Circuits were mainly used in controlled environments. But now might be their time to shine on a global scale. When combined with Bitcoin’s public, immutable ledger, Garbled Circuits could unlock a ton of potential, including:
- Treasury proofs without revealing wallets or UTXO structure:
Let Bitcoin treasury companies or DAOs prove holdings without exposing addresses or balances.
- Better bridges to Bitcoin (BitVMX + Garbled Circuits):
Enable private off-chain computation for bridge logic and verify it on Bitcoin using BitVMX. Rootstock’s new bridge architecture, codenamed UNION, will use BitVMX and Garbled circuits to build the most secure, trust-minimized, and cost-effective bridge between Bitcoin and another network.
- Private DeFi & smart contracts on Rootstock:
Run lending, auctions, or DAO voting logic privately using garbled circuits, with final verification on-chain via BitVMX.
- Secure, Collaborative Custody & Compliance:
Allow multiple parties like custodians, signers, and oracles to compute approvals or compliance checks without giving away sensitive internal rules or information.
Bitcoin Treasuries: A Real-World Example
Now imagine you’re a Bitcoin treasury company like Microstrategy, Metaplanet, or Twenty One Capital holding large amounts of BTC across multiple wallets. You want to prove to the public, your investors, or regulators that you actually hold 10,000 BTC, but you don’t want to reveal your wallet addresses or UTXO structure for security and privacy reasons outlined recently by Michael Saylor.
Using garbled circuits or other forms of MPC protocols, you could:
- Generate cryptographic proofs that demonstrate the total BTC under your control.
- Prove the sum without revealing individual wallet balances or addresses.
- Publish this proof publicly, or share it with specific parties, without leaking sensitive data.
This is provable transparency without doxxing your treasury strategy. You could take this even further by publishing the proof as a verifiable claim using Rootstock Attestation Service and then creating dashboards, smart contracts, and more that can interact with this data, for example, automatically buying rBTC every time Saylor places an order.
Other potential use cases for garbled circuits include
- Private DeFi: Two users could settle a loan or swap contract without revealing collateral amounts or wallet history.
- Identity and KYC: Prove you’re accredited or verified without exposing your identity data.
Garbled circuits are part of a growing toolbox that bridges the gap between transparency and privacy, something Bitcoin-native users are increasingly demanding. We hope this article gave you at least a fundamental understanding of how Garbled Circuits could benefit Bitcoin. The improvements to Yao’s protocol are increases in efficiency; smaller circuits. This research is ongoing and continues to develop.
To get deeper into the details, check out the links below.
- A Gentle Introduction to Yao’s Garbled Circuits by Sophia Yakoubov
- Understanding Yao’s Classical Garbled Circuits by ZKPass
- Delbrag: proposed enhancement to BitVM-style constructions using Garbled Circuits
- Glock: A new standard for verification on Bitcoin (using GCs)
Or if you’re interested in talking to the team at RoostockLabs about how we could help your organisation unlock additional value out of your Bitcoin holdings, get in touch.