The DFINITY Foundation, the not-for-profit organization contributing to the development of the Internet Computer (IC) — the world’s first web-speed, internet-scale public blockchain — has today announced the Internet Computer’s mainnet integration with Bitcoin, bringing advanced smart contract functionality to the world’s largest cryptocurrency. The Internet Computer can now serve as a Layer 2 for Bitcoin where smart contracts on the Internet Computer can hold, send and receive Bitcoin natively, without the need for blockchain bridges or other third parties. This provides a trustless foundation for various DeFi and Web3 applications seeking to code Bitcoin.
Latest Fintech News: Wells Fargo’s Vantage Platform Enhances Commercial and Corporate Clients’ Digital Experience
Manu Drijvers, Director of Engineering at the DFINITY Foundation, explains: “Blockchains are like walled gardens, incapable of interaction between one another. When this comes to Bitcoin, applications, such as DeFi applications, that could benefit most from interacting with the world’s largest cryptocurrency do not have the ability to do so. The Internet Computer’s integration with Bitcoin is a true game-changer for the industry, finally bringing smart contract functionality to Bitcoin and enabling a whole new landscape of DeFi and dapp development never before possible using BTC. We are incredibly excited to see how developers interact with this revolutionary functionality.”
Now, the world’s most popular cryptocurrency can be used for DeFi activities like yield farming, lending, payments and more. This is achieved through the Internet Computer’s enhanced Chain-key cryptography. The direct integration with Bitcoin obliviates bridged and wrapped Bitcoin, a technique typically used to facilitate interaction between different blockchains, and one that is error prone and often hacked. To enable fast Bitcoin transactions between smart contracts on the Internet Computer, the DFINITY foundation is currently working on Chain-Key Bitcoin (ckBTC). Here, ckBTC will act as a local ledger facilitating fast transactions with low fees and only settle transactions on the Bitcoin network when necessary.
The Internet Computer’s integration with Bitcoin also provides a more secure alternative to centralized bridges in the form of threshold ECDSA (Elliptic Curve Digital Signature Algorithm). The implementation of ECDSA empowers the Internet Computer’s canister smart contracts, to directly conduct Bitcoin transactions without an intermediary or bridge. This provides a trustless foundation for DeFi projects using Bitcoin and enables IC developers to code natively on Bitcoin.
Jan Camenisch, Chief Technology Officer at the DFINITY Foundation, said: “Making Bitcoin programmable will increase the overall potential of blockchain technology. Unlocking Bitcoin’s unmatched liquidity will bring enormous benefits and new possibilities for users and developers across a wide range dapps including DeFi, GameFi, SocialFi, and NFTs. This direct integration also eliminates the Achilles’ heel of other approaches to make Bitcoin available on other networks such as wrapping and bridging. Unfortunately, we have seen the drawbacks of these solutions over the past year through a number of high-profile hacks, leaving networks hopelessly vulnerable to attacks. Bitcoin lending via decentralized exchanges, for example, is now possible with security superior to what is available on any other platform thanks to the Internet Computer’s direct and trustless integration, making it a natural choice for DeFi developers.”
The ICP developer community has long expressed a strong demand for this feature. DEX projects such as Helix or IC Lighthouse are already building on the Bitcoin and Chain-Key signing features to offer bridgeless inter-chain token swaps. A few ecosystem dapps are also ready to launch some creative use cases beyond DeFi. Among them, crowdfunding platform – CrowdfunNFT – will accept funding for projects in BTC. This will expand the crowdfunding market overall, and bring in a fresh set of project backers from the crypto world. Other examples of interesting use-cases in development are transactions in BTC on NFT marketplaces and peer-to-peer transfer of BTC directly on social media and instant messaging dapps. The programmability of Bitcoin will open many more unique and imaginative use-cases in the future.
Latest Fintech News:Â JRNI and Mad Mobile Partner to Drive Seamless Customer Engagements
[To share your insights with us, please write to sghosh@martechseries.com]
