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I was reading through Vitalik's blockchain interoperability paper available here

One thing he mentions is a company / project called EthereumLottery.io (currently not operating) which managed to achieve one way blockchain interoperability by reading Bitcoin's block height.

This sounds extremely exciting so I decided to give it a go and understand how its smart contract works. The smart contract is available here and I recommend reading it.

I read it and from my understanding, the blockchain interoperability part happens with those lines of code:

contract BTCRelay {
function getLastBlockHeight() returns (int);
function getBlockchainHead() returns (int);
function getFeeAmount(int blockHash) returns (int);
function getBlockHeader(int blockHash) returns (bytes32[3]);
}

I tried to go through it in full, however I do not understand at which point the smart contract manages to get the last Bitcoin block height. Is it a function called manually / centralized which uses a server/API to get the last block?

If so, does that mean that the contract owner could, at anytime pass anything else than the last bitcoin height?

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BTCRelay works as Bitcoin light client (SPV): https://en.bitcoinwiki.org/wiki/Simplified_Payment_Verification

That's why I like Nakamoto-like consensuses: even smart contract can be a light client of this chain.

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