Industry-wide support for Taproot remains consistent a year after the Bitcoin soft fork, showing strong potential for innovation and wider adoption of unblockable Web3 solutions, thanks to the world’s largest cryptocurrency, d Cointelegraph sources told.
“From the beginning, Satoshi predicted that the layers built on top of the Bitcoin blockchain would further enable bitcoin to be sound money by adding programmability, making Bitcoin the best framework for developing Web3 capabilities . . noted Alex Miller, CEO of the Web3 development platform Hiro.
The Taproot upgrade took place in November 2021 and laid the foundation for accelerating decentralized financial services through the Bitcoin (BTC) network. It enables more efficient validation of multi-signature scripts, which addresses privacy concerns and improves block storage by reducing the amount of complex transactions that occur on the network.
These changes were long overdue by the industry, as many bitcoin holders do not use their coins for decentralized finance (DeFi) applications “because it involves the tedious task of returning them using a bridge . so that they can be processed by smart contracts on another. blockchain like Ethereum,” said Dominic Williams, Founder and Chief Scientist of DFINITY, the foundation behind the Internet Computer blockchain, which is one of the companies working to unlock bitcoin’s potential for DeFi.
Internet Computer announced on December 5th the integration of its mainnet with the Bitcoin network, serving as layer 2 where smart contracts can hold, send and receive BTC natively, without the need for third parties or blockchain bridges, which were one of the targets of hackers in 2022 when billions of dollars were drained. According to the company, almost all DeFi applications built on the Internet Blockchain plan to integrate a bitcoin computer because of the liquidity it provides.
Also read: The future of smart contract adoption for businesses
With smart contract functionality for Bitcoin, users willing to participate in DeFi are able to send their coins to a Bitcoin smart contract address and withdraw coins directly from their wallet. msgstr “Soon you’ll be able to send a simple chat message, such as ‘Happy Birthday!’ Here comes 100,000 satoshis! using an all-on-chain Web3 service, such as Open Chat. “Williams noted.
Enabling Web3 on the Bitcoin blockchain means more trust in cryptocurrencies and DeFi applications, Alex Miller said:
“The recent centralized entities like FTX will only increase interest in truly decentralized finance, where transactions are algorithmically secured at the consensus level and users don’t have to trust third-party custodians to do “the right things” with their their assets. . And because of its history as a pioneer of decentralized trust, Bitcoin is the most logical place for people to conduct DeFi transactions. »
Decentralized Autonomous Organizations (DAO) could also benefit from Bitcoin’s smart contract functionality, according to Miller, but DeFi is likely to see most of the growth. “People want to know that the blockchain they invest time and money into will still be around in a few years, Bitcoin has a proven track record for that. In bearish markets, developers and investors are looking for safer assets to target and bitcoin will always have a unique distinction here. Looking forward to 2023, I believe DeFi will be the biggest growth point in our ecosystem. »
With nearly 14 years of existence, Bitcoin has experienced several hard and soft forks from the crypto community. Future updates may include covenants, which are described in Bitcoin Improvement Proposal (BIP) 119 and which would limit the address where a user can send their funds.