Internet Computer <> Bitcoin integration making smart contracts possible on BTC, without using shaky bridges.
Dominic Williams “You can write smart contract logic on the Internet Computer that will actually move bitcoin on the Bitcoin network
Dfinity recently hosted a chat on Twitter spaces recently where Diego Prats & Manu Drijvers broke down how chain integrations work and what is different about the IC<> BTC integration in simple terms. Here are some quick takeaways from their session.
What is an Integration across chains? If one has something running on blockchain A, then one can use the assets that are native on blockchain B and also on blockchain A , so the different assets can cross over between different blockchains.
What are Smart Contracts across chains? A smart contract on the one blockchain can call or or interact with a smart contract running on a different blockchain.
Does one chain need permission from the other to do this? Typically it doesn’t need any permission, especially for Bitcoin as it is completely permission-less.
What exactly a bridge? A bridge means that one can use the strengths of different block chains in one of system, however the disadvantage is that typically what allows this interoperability is some external components which are not native to the blockchains.
How do these bridges work? If one wants to have an app on blockchain A but wants to work with something on blockchain B , and there is a bridge between the two, the bridge is the third party intermediary, however this can go horribly wrong making this whole system vulnerable.
How is it different in the case of the Internet Computer? At IC, with the Bitcoin integration, the canister will be able to hold real Bitcoin without the need for some separate third party bridge.The Internet Computer bypasses bridges for Bitcoin entirely
What is a wrapped Bitcoin? Wrapped Bitcoins exist on different chains using bridge protocols. They’re typically some entity or group of entities that act like custodians. They work in this fashion “Send your Bitcoin to us, and we’ll loan you some wrapped Bitcoin for use on Ethereum or other chains” When users want to cash out, they then re-exchange the wrapped bitcoin in return for their real Bitcoin.All of this wrapping relies on intermediaries.
How is the IC approach different? IC has a direct integration with Bitcoin which means that you can wrap it directly on a canister. The canister can hold real Bitcoins without any intermediary involved. So, if one gives you a real Bitcoin, using the integration, one will give you a wrapped Bitcoin back and that wrapped Bitcoin is a native token to the Internet computer.
What does this mean for Bitcoin & IC developers in practice? For the IC developers, they can truly hold real Bitcoin & build on it. And inversely, it means that a Bitcoin person, developer or otherwise, can use smart contracts on Bitcoin.
What is the Internet computer’s technology that enables this? It’s called chain key cryptography — this is what is used to have all the different subnets securely communicate with each other. And this system is actually very close to what is needed for Bitcoin integration.
What will Bitcoin holders be able to do? Bitcoin users would be able to take part in the same kind of DeFi boom explosion that they seen in Ethereum. This will unleash it’s potential by removing the limitations of Bitcoin like speed, transactions per second etc. For someone who really believes in Bitcoin, they will be able to write smart contracts for Bitcoin and not have to go to another layer.
Opportunities for new developers: Bitcoin integration would give new smart contract developers the best of both worlds. It would give them the IC smart contracts which are very expressive and very powerful and then it would also give them access to the liquidity pool of Bitcoin which is the largest crypto currency of the world.
For more details listen to Dominic Williams talk through the details of this integration.
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