DFINITY Brings New Smart Contract Functionality to Bitcoin with Internet Computer Integration » CryptoNinjas

The DFINITY Foundation, the nonprofit organization contributing to the development of the Internet Computer (IC) — a high-speed, public Internet-scale blockchain — today announced the Internet Computer’s mainnet integration with Bitcoin, bringing smart contract functionality to the cryptocurrency .

Now the internet computer can serve as layer-2 for bitcoin, where smart contracts on the internet computer can natively hold, send and receive bitcoin without the need for bridges or other third parties. This provides a trusted foundation for various DeFi and Web3 applications attempting to encode Bitcoin.

“Blockchains are like walled gardens that are unable to interact with each other. When it comes to Bitcoin, applications like DeFi applications that could benefit most from interacting with the world’s largest cryptocurrency are unable to do so. The integration of the internet computer with Bitcoin is a real game changer for the industry as it finally brings smart contract functionality to Bitcoin and enables a whole new landscape of DeFi and Dapp development never before possible with BTC.”
– Manu Drijvers, Technical Director of the DFINITY Foundation

With IC integration, Bitcoin can be used for DeFi activities such as yield farming, lending, payments and more…

This is accomplished through the Internet computer’s improved chain-key cryptography. Direct integration with bitcoin avoids 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 acts as a local ledger, enabling fast transactions with low fees and only settling transactions on the Bitcoin network when necessary.

Benefits / Developer

The integration of the Internet computer with Bitcoin also offers a more secure alternative to centralized bridges in the form of threshold ECDSA (Elliptic Curve Digital Signature Algorithm). The implementation of ECDSA enables the Internet computer’s canister smart contracts to directly conduct bitcoin transactions without an intermediary or bridge.

ICP’s developer community has long expressed strong demand for this feature…

DEX projects like Helix or IC Lighthouse are already building on the signature features of Bitcoin and Chain-Key to offer bridgeless inter-chain token swaps. Additionally, some ecosystem dApps are also poised to launch some creative use cases beyond DeFi.

Among them is crowdfunding platform CrowdfunNFT – which will be accepting funding for projects in BTC. The goal is to expand the crowdfunding market as a whole and attract a new group of project supporters to crypto. Other examples of use cases under development include transactions in BTC on NFT marketplaces and peer-to-peer transfer of BTC directly to social media and messaging dApps.

Bitcoin’s new programmability will open up more unique and imaginative use cases in the future.

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