On April 3, 2023, the Dfinity Foundation, a development team behind the Internet Computer (ICP) network, announced the launch of a native ICP token called “chain-key bitcoin” or “ckBTC.” The Bitcoin derivative is backed 1:1 with the leading cryptocurrency asset. On Monday, Dfinity detailed that the technology “builds on protocol-level integration with the Bitcoin network.”
Breaking Away from Custodians and Bridges: The Benefits of Chain-Key Bitcoin’s Smart Contract-Based System
On Twitter, Dfinity Foundation announced the full release of chain key bitcoin, also known as ckBTC. “Proposals 115468, 115470 and 115473 have passed with flying colors,” the team explained. “Thank you all [ICP] people who manually voted to make this happen.” According to a blog post, ckBTC is backed 1:1 with bitcoin (BTC), and the system operates with “centralized custodians, no bridges, and no traditional cloud providers.”
The ICP-based bitcoin derivative is considered a “significant breakthrough in blockchain interoperability,” and the technology is integrated with Bitcoin at the protocol level, according to the Dfinity blog post. The ckBTC system uses vaults called canisters, which work with a smart contract instead of relying on a custodian or bridge. Essentially, to get ckBTC, a person has to deposit BTC in exchange for the ICP token, and withdrawals work the same way when ckBTC is redeemed for real bitcoin.
“Any container can send Bitcoin transactions to the Bitcoin network through ICP nodes, thanks to the direct integration at the protocol level,” explains Dfinity. The company insists that the technology has significant potential and can contribute to new areas of use.
“[Native cross-chain technology] has the potential to enable new cross-chain features and unlock a multitude of 100% on-chain services, such as multi-token transactions or multi-token wallet systems, which will greatly streamline the crypto user experience,” notes Dfinity’s blog post.
The announcement further details that several ICP-based decentralized applications (dapps), including Openchat, Iclighthouse, Plethora Game and Distrikt App, already support ckBTC. While many blockchains have bitcoin derivatives, most rely on bridges or custodians. For example, the largest bitcoin derivative WBTC utilizes the custodian Bitgo for minting and redemption purposes.
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Bitcoin, BitGo, Blockchain, Blockchain network, blockchain technology, Bridges, Chain-Key Bitcoin, ckBTC, cross-chain technology, Crypto, Cryptocurrency, custodians, decentralized applications, decentralized finance, DEX, dfinity, Dfinity Foundation, Digital Assets, Digital Currency, Distrikt App, Iclighthouse, ICP, ICP Nodes, ICP-Based, Interoperability, Multi-Token Transactions, Multi-Token Wallet Systems, On-Chain Services, Openchat, Plethora Game, Protocol Level Integration, Smart Contracts, Tokenization, Virtual Currency, WBTC
What potential do you see in the native cross-chain technology behind ckBTC and how do you think it will impact the future of blockchain interoperability? Share your thoughts on this topic in the comments section below.
Jamie Redman
Jamie Redman is the news editor at Bitcoin.com News and a financial technology journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
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