Some of the greatest challenges in DeFi—and smart contract technology in general—are security threats when transacting between blockchains.
Last year, over a billion dollars was lost due to “blockchain bridges” that are notoriously insecure and prone to technical errors. That being said, demand for Bitcoin liquidity on DeFi platforms is unrelenting, as Bitcoin currently accounts for nearly 40% of crypto’s total market cap.* Widespread adoption of Bitcoin suggests that a smart contract solution that eschews bridge-related security concerns could unlock billions of dollars of capital on DeFi platforms.
Last month, the Internet Computer blockchain (ICP) introduced a game-changing advancement in this arena—an elegant and bridge-less solution to the challenge of cross-chain smart contracts.
Through the power of threshold cryptography, ICP smart contracts can now operate keys to move Bitcoin directly on its network without the need for intermediaries to exchange value between chains. By coordinating signatures amongst multiple computers holding shares of private keys, keys remain fully secure throughout the entire smart contract execution process.
In other words, smart contracts on the Internet Computer can now hold, send and receive Bitcoin natively at the protocol level without the need for bridges or trusted third parties. Users can send and receive Bitcoin to addresses directly controlled by smart contracts on ICP—allowing for trustless movement of funds in and out of DeFi protocols.
As Bitcoin remains a primary settlement asset for all sorts of crypto trading activities, the market for safe and secure smart-contract functionality for Bitcoin is paramount—and the Internet Computer is poised to lead the way.
Furthermore, the implications of being able to “code” Bitcoin—that is, bring smart contract functionality to the Bitcoin blockchain—extends far beyond DeFi and financial services.
USE CASES FOR NATIVE BITCOIN IN WEB3 APPLICATIONS
In addition to using native Bitcoin integration, developers can build decentralized web applications (Dapps) on the Internet Computer—allowing for end-to-end decentralized payments services. For instance, ICP developers can now build Bitcoin payments APIs fully on chain without the need for Web2 integrations of any kind, or even centralized servers.
Using the ICP blockchain, Bitcoin payments can be securely integrated into any number of Web3 applications. Imagine sending Bitcoin through on-chain chat services, like OpenChat, with messages like “Happy Birthday! Here’s 1,000 satoshis!”
This is a massive step forward in the fight for a truly decentralized internet as other smart contracts platforms rely heavily on Web2 interfaces throughout their user journey.
Other use cases for the integration of native Bitcoin into Web3 services include things like Bitcoin gaming rewards, decentralized marketplaces, SocialFi, and peer-to-peer payments services. The possibilities for integrating native Bitcoin into Dapps mirror that of any Web2 payments integrations you can think of.
Additionally, ICP developers will soon be able to integrate Ether (ETH) and other ECDSA-based tokens into Dapps as well. Direct interaction with tokens on a variety of blockchains will soon be streamlined on the Internet Computer—making truly trustless cross-chain interoperability a reality.
This is the future of Web3 and Web3 payments—the ability to use funds from any blockchain trustlessly within Web3 apps and services.
Dominic Williams is the Founder and Chief Scientist at the DFINITY Foundation—the primary contributor to the Internet Computer blockchain (ICP). The Internet Computer aims to develop a World Computer blockchain that could replace traditional centralized IT, such as cloud computing services.
As builders on the Internet Computer develop end-to-end, fully on-chain applications and services—Dominic Williams continues his leadership as a distinguished crypto theoretician and serial entrepreneur focused on the Internet and distributed systems. For more details about the Internet Computer blockchain, review key metrics and other ICP information here.
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