Support for Taproot across the industry is still creeping up one year after the Bitcoin soft fork, sources told Cointelegraph, indicating strong potential for innovation and broader adoption of Web3 solutions by the world’s largest cryptocurrency.
“From the outset, Satoshi predicted that the layers being built on top of the Bitcoin blockchain would enable Bitcoin to go beyond being pure money just by adding programmability, making Bitcoin the perfect framework for building Web3 capabilities,” noted Alex Miller, CEO of Web3 Developer Platform. Hiro.
Taproot was upgraded in November 2021 and laid the foundation for accelerating decentralized financial services through the Bitcoin network. It enables more efficient verification of multi-signature scripts, which addresses privacy issues and improves block storage by reducing the volume of complex transactions that occur on the network.
Long overdue changes in the industry, as many Bitcoin (BTC) holders do not use their currencies for Decentralized Finance (DeFi) applications “because it involves the cumbersome task of encapsulating it with a bridge so that it can be processed by a smart” commented Dominic Williams, Founder and Chief Scientist at DFINITY , the organization behind the internet computer blockchain.
Internet Computer announced its mainnet integration with the Bitcoin network on December 5. It is a layer 2 where smart contracts can hold, send and receive BTC locally without the need for third parties or blockchain bridges. According to the company, almost every DeFi application built on the Internet’s PC blockchain plans to integrate Bitcoin because of the liquidity it provides.
Related: The Future of Enterprise Smart Contract Adoption
With Bitcoin smart contract functionality, users willing to participate in DeFi can send their coins to a Bitcoin smart contract address and withdraw them directly to their wallets. Soon you’ll be able to send a simple chat message, like “Happy Birthday!” Here’s 100,000 satoshi! “Using a full-chain Web3 service like Open Chat,” Williams noted.
Alex Miller states that enabling Web3 on the Bitcoin blockchain also means more trust in cryptocurrencies and DeFi applications:
“Recent internal meltdowns at centralized entities like FTX will continue to drive interest in truly decentralized finance — where transactions are secured algorithmically at the consensus level and users don’t have to trust third party custodians to ‘do the right things’ with their coins. Given its pioneering history in decentralized trust Bitcoin is the most logical place for people to conduct DeFi transactions.”
Decentralized autonomous organizations could benefit from the smart contract functionality of bitcoin as well, according to Miller, but DeFi will likely account for most of the growth. “People want to know that the blockchain they invest time and money in will be around in a couple of years. Bitcoin has a great track record here. In bear markets, developers and investors alike are looking for safer assets to focus on, and Bitcoin will always hold a unique distinction here.” Looking ahead to 2023, I believe DeFi will be the biggest growth point in our ecosystem.”
Bitcoin has experienced many hard and soft forks in its 14-year history. Upcoming upgrades may include the pledges described in Bitcoin Improvement Proposal (BIP) 119 and will restrict the address to which a user can send funds.