The Internet Computer’s (IC) pioneering Bitcoin integration combines the liquidity of Bitcoin with the programming capabilities of the IC’s smart contracts
[Zurich] The DFINITY Foundation, the nonprofit organization contributing to the development of the Internet Computer (IC) — the world’s first public blockchain with Internet speed and Internet scale — today announced the Internet Computer’s mainnet integration with Bitcoin, bringing an advanced smart contract Functionality to the largest cryptocurrency in the world. The Internet computer can now serve as Layer 2 for Bitcoin, where smart contracts on the Internet computer can natively store, send, and receive Bitcoin without the need for blockchain bridges or other third parties. This provides a trusted foundation for various DeFi and Web3 applications attempting to encode Bitcoin.
Manu Drijvers, Director of Engineering at the DFINITY Foundation, explains: “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 capabilities to Bitcoin and enables a whole new landscape of DeFi and Dapp development never before possible with 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 accomplished through the Internet computer’s improved chain-key cryptography. Direct integration with Bitcoin eliminates the need for bridged and wrapped Bitcoin, a technique typically used to facilitate interaction between different blockchains, which 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 acts as a local ledger, enabling fast transactions with low fees and only settling transactions on the Bitcoin network when needed.
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. This provides a trusted foundation for DeFi projects using Bitcoin and allows 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 users and developers tremendous benefits and new opportunities for a wide range of DApps, including DeFi, GameFi, SocialFi, and NFTs. This direct integration also eliminates the Achilles’ heel of other approaches to making Bitcoin available on other networks, such as wrapping and bridging. Unfortunately, over the past year we’ve seen the downsides of these solutions through a series of high-profile hacks that have left networks hopelessly vulnerable to attack. Borrowing Bitcoin, for example, via decentralized exchanges is now possible thanks to the direct and trusted integration of the internet computer with security superior to that available on any other platform, making it a natural choice for DeFi developers.”
The ICP 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. Some ecosystem dapps are also poised to launch some creative use cases beyond DeFi. Among them, the crowdfunding platform – CrowdfunNFT – will accept funding for projects in BTC. This will expand the crowdfunding market as a whole and bring in a new group of project backers from the crypto world. Other examples of interesting use cases under development include transactions in BTC on NFT marketplaces and peer-to-peer transfer of BTC directly on social media and instant messaging dapps. Bitcoin’s programmability will open up many more unique and imaginative use cases in the future.
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