DFINITY Foundation, the not-for-profit organization contributing to the development of the Internet Computer (IC) — a high-speed, internet-scale public blockchain — has announced today the Internet Computer’s mainnet integration with Bitcoin, bringing smart contract functionality to the cryptocurrency.
Now, the Internet Computer can 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 bridges or other 3rd-parties. This provides a trustless foundation for varied DeFi and web3 applications seeking to code Bitcoin.
“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.”
– Manu Drijvers, Director of Engineering at the DFINITY Foundation
With IC integration, bitcoin 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 averts the need for bridged and wrapped Bitcoin, a technique used to facilitate interaction between different blockchains, but one that is error-prone and often hacked.
To enable fast bitcoin transactions between smart contracts on the Internet Computer, the DFINITY Foundation is now 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.
Benefits / Developers
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.
ICP’s 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. Moreover, a few ecosystem dApps are also ready to launch some creative use cases beyond DeFi.
Among them is the crowdfunding platform, CrowdfunNFT – which will accept funding for projects in BTC. The aim is to expand the crowdfunding market overall and bring in a fresh set of project backers to crypto. Other examples of use cases in development are transactions in BTC on NFT marketplaces and peer-to-peer transfer of BTC directly on social media and messaging dApps.
Bringing new programmability to Bitcoin will open more unique and imaginative use cases in the future.