One year after updating Teprot; Will Bitcoin finally make its way to DeFi?
One year after the Taproot soft fork, the level of support for this update at the level of the Bitcoin network is still A small amount (less than 2%) According to experts, this shows the potential of Bitcoin to pave the way for wider adoption of digital currency technology and the Web 3.0 domain.
To Report Alex Miller, CEO of Web 3.0 platform Hiro, told Kevin Telegraph:
From the very beginning, Satoshi Nakamoto predicted that the layers that are built on the Bitcoin blockchain could put Bitcoin on the path to becoming more than just a valuable currency by adding programmability to this digital currency.
The November 2021 (Aban 1400) Teprot update was done and somehow added the necessary infrastructure to speed up the process of adding the possibility of providing decentralized financial services to the Bitcoin blockchain. By performing this soft fork, the possibility of more efficient validation of multi-signature scripts was added to the Bitcoin network; A feature that improves network security and optimizes the storage process on the Bitcoin blockchain by reducing the volume of complex transactions.
Dominic Williams, founder and chief researcher of DFINITY, says that many Bitcoin holders use their units (coins) in programs active in the field of decentralized finance, or DeFi. they do not; Because this requires going through a relatively difficult process to create Bitcoin representative tokens using interchain bridges and smart contracts of other blockchains such as Ethereum. Definity is the same institution that launched the famous computer Internet project and has made many serious efforts to open Bitcoin to the field of DeFi.
Internet Computer announced on December 5 that the integration of this network with the Bitcoin blockchain was completed; This means that computer internet can henceforth appear as a second layer network (Layer 2) for Bitcoin and it will be possible to store, send and receive Bitcoin in smart contracts based on this network without the need for third-party platforms or inter-chain bridges. It should be mentioned that in 2022, inter-chain bridges have been one of the main victims of hacker attacks.
According to the Definity Foundation, almost all DeFi programs active on the Internet computer network intend to provide the possibility of interacting with the Bitcoin network in order to attract more liquidity.
With the addition of smart contract capabilities to the Bitcoin ecosystem, users interested in working in the field of DeFi will be able to transfer their capital to Bitcoin-based smart contracts and track this transfer directly from their personal wallet without any intermediaries. .
Williams said:
It won’t be long before you’ll be able to send a message like “Happy Birthday! This 100,000 satoshi is dedicated to you! Send to your friend.
Alex Miller, stating that Bitcoin’s entry into the Web 3.0 domain will increase users’ trust in digital currencies and decentralized applications, added:
The recent crisis that centralized entities such as the “FTX” exchange have been involved with will increase the interest of users to use financial services that are literally decentralized; Where transactions are secured with algorithmic solutions and users do not have to trust third parties to properly maintain their capital. In addition, since Bitcoin is one of the pioneers in the field of decentralized trust, it will logically be the best network for processing DeFi transactions.
According to Miller, decentralized self-governing organizations, or DAOs, can also benefit from Bitcoin-based smart contracts; But it is expected that the DeFi sector will account for the most growth in this field.
He says:
People expect the network they invest their time and wealth on to be active for many years to come, and Bitcoin has a proven track record of this. During bear markets, developers and investors alike look for safer assets, and Bitcoin will always stand out from other assets in this respect. I imagine that DeFi will be the biggest growth point of the digital currency industry in 2023.
During its 14 years of existence, Bitcoin has experienced several different soft forks and hard forks, all of which were directed by the community of this digital currency. The next update, however, may include changes based on Bitcoin Improvement Plan #119 (BIP-119) to allow some bitcoins to be deposited into an address if necessary, and that address will only be able to receive bitcoins. commit itself to a specific list of addresses, which will be a useful feature for scheduling and routing transactions in this network.