Bitcoin based Smart Contracts: DFINITY Focused on Internet Computer Integration with BTC Network

By August 5, 2022DeFi
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Advanced smart contracts are “finally coming” to Bitcoin.

The DFINITY R&D team has announced “the beta release of the Internet Computer’s direct integration with the Bitcoin network, which eliminates any reliance on a trusted intermediary or bridge.”

Developers can immediately “begin testing and building with the integration’s APIs.”

This milestone “paves the way toward a successful general availability (GA) release in the coming months, delivering innovative smart contract functionality for Bitcoin on the highly scalable Internet Computer blockchain, with fast finality and low transaction cost.”

It is part of “a broader roadmap to integrate the IC with existing systems, fulfilling its mission to provide a powerful general-purpose blockchain that is open, secure, and scalable.”

The Bitcoin integration beta release includes:

  • An experimental Bitcoin Testnet integration API for the development and pre-production testing of canister smart contracts using bitcoin. (Same API as that of the upcoming GA release.)
  • A threshold ECDSA deployment with a test key,** which supports the Bitcoin integration as well as integrations with other blockchains that use the ECDSA scheme, such as
  • Ethereum.
    Documentation:
    — https://internetcomputer.org/docs/current/developer-docs/functionality/bitcoin/
    — https://internetcomputer.org/docs/current/developer-docs/functionality/t-ecdsa
  • And sample code for deploying canisters in Motoko and Rust. Please note that “the test key of the current deployment is intended solely for development and testing purposes, e.g., to hold bitcoin on Bitcoin Testnet, and may be deleted in the future.” The team “strongly discourage attaching any real-world value to this experimental test key.”

No Bridges

There have recently “been numerous incidents of blockchain bridges being compromised, resulting in substantial exploits and losses.”

An essential attribute of this direct Bitcoin integration is that it is “trustless,” dispensing “with additional trust assumptions apart from the inherent properties of the Bitcoin network and the Internet Computer.”

The implementation does ‘not require any additional parties that need to be trusted for security or for the integration’s availability, and therefore does not have single points of failure.”

The Bitcoin integration “enables Internet Computer canisters to hold bitcoin addresses and function as wallets that can hold, receive, and send bitcoin through controlling ECDSA signing keys.”

Bitcoin smart contracts can be “securely developed around native bitcoin, and can hold their own bitcoin keys natively and securely.”

This opens up new possibilities “for use cases involving bitcoin, such as social platforms like OpenChat allowing users to transfer bitcoin via instant message and dapps like Spinner supporting private bitcoin transactions using zero-knowledge proofs.”

BTC-based DeFi

The properties of the Internet Computer’s Bitcoin integration “will make it a premier foundation for DeFi that incorporates bitcoin, enhancing the functionality and value of the existing DeFi ecosystem while unleashing a wave of new projects leveraging bitcoin liquidity, such as InfinitySwap, Sonic, and ICPSwap.”

Bitcoin crypto lending, for example, would “be possible in a stronger trust model than is available on other platforms thanks to the Internet Computer’s direct and trustless integration, making it a natural choice for DeFi developers.”

Overall, BTC could “become one of the major tokens on the Internet Computer besides ICP to be used for any conceivable use case.”

For more details on this update, check here.

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