Yes, we need Bitcoin for bridgeless DeFi

Some of the biggest challenges in DeFi – and smart contract technology in general – are security threats in transactions between blockchains.

Last year over a billion dollars was lost due to “blockchain bridges” which are notoriously insecure and prone to technical failures. That said, demand for Bitcoin liquidity on DeFi platforms is unrelenting, as Bitcoin today accounts for nearly 40% of crypto’s total market capitalization.* Widespread use of Bitcoin suggests that a smart contract solution that avoids bridge-related security issues could unlock billions of dollars of capital on DeFi platforms.

Last month, the Internet Computer blockchain (ICP) introduced a game-changing advance in this arena – an elegant and bridgeless solution to the challenge of cross-chain smart contracts.

Through the power of threshold cryptography, ICP smart contracts can now serve keys to move Bitcoin direct on its network without the need for intermediaries to exchange values ​​between chains. By coordinating signatures between multiple computers holding shares of private keys, the keys remain completely secure throughout the smart contract execution process.

In other words, smart contracts on the Internet computer can now hold, send and receive Bitcoin 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 – enabling trustless movement of funds in and out of DeFi protocols.

Since Bitcoin remains a primary means of settlement for all kinds of crypto trading activities, the market is too safe and secure smart-contract functionality for Bitcoin is essential – 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 – extend far beyond DeFi and financial services.

USE CARTRIDGES 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 end-to-end decentralized payment services. For example, ICP developers can now build Bitcoin payment APIs entirely 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, such as OpenChat, with messages like “Happy birthday! Here’s 1000 satoshis!”

This is a huge step forward in the fight for a truly decentralized internet as other smart contract platforms rely on Web2 interfaces throughout the user journey.

Other use cases for integrating native Bitcoin into Web3 services include things like Bitcoin game rewards, decentralized marketplaces, SocialFi, and peer-to-peer payment services. The possibilities to integrate native Bitcoin into Dapps mirror any Web2 payment integration you can think of.

In addition, 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 really trustless interoperability across chains a reality.

This is the future of Web3 and Web3 payments – the ability to spend funds from any blockchain without trust in Web3 apps and services.

BIO:

Dominic Williams is founder and chief scientist at the DFINITY Foundation – the primary contributor to the Internet Computer blockchain (ICP). Internet Computer aims to develop a World Computer blockchain that can replace traditional centralized IT, such as cloud computing services.

As builders of the Internet computer develop end-to-end, fully chained applications and services – Dominic Williams continues his leadership as a prominent cryptotheorist and serial entrepreneur focused on the Internet and distributed systems. For more information on the Internet Computer Blockchain, see key figures and other ICP information here.

Disclaimer

In accordance with Trust Project guidelines, this opinion piece presents the author’s perspective and does not necessarily reflect the views of BeInCrypto. BeInCrypto remains committed to transparent reporting and maintains the highest standards of journalism. Readers are advised to independently verify information and consult with a professional before making decisions based on this content.

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