5 Projects that allow the development of smart contracts on Bitcoin

Source: Adobe / wellphoto

Smart contracts became famous for the Ethereum (ETH) network, which offers comprehensive smart Turing contracts that enable the development of decentralized products and services. What not everyone knows, however, is that smart contracts also exist in Bitcoin (BTC).

Read on for more information on Bitcoin smart contracts and the different projects that drive smart contract functionality over the Bitcoin network.

Smart Contracts in Bitcoin: What’s Possible with Script?

A smart contract is a coded agreement between two or more parties that is automatically executed when the predefined criteria are met.

For example, a smart Bitcoin contract may indicate that a BTC payment should be sent from one person to another once a pleasant task has been completed.

The Bitcoin network supports different types of smart contracts using Script, the scripting language you use.

With Script, users can create different criteria for how their BTC is used. In addition, scripts may also block certain amounts of BTC in specific bitcoin transactions, where users must be able to meet these standards before they can spend the blocked BTC on that script.

Examples of Bitcoin smart contracts

For over ten years Script has been used in the Bitcoin protocol, it has proven to be a useful scripting language that supports a wide range of smart Bitcoin contracts, such as the simplest paid public key hash ( P2PKH) to more complex scripts such as multiple signature scripts, pay-to-script-hash (P2SH) and time-blocked transactions.

Let’s take a look at the most common types of scripts used by Bitcoin.

Payment by public key (P2PKH)

A P2PKH is a simple and popular script that allows users to send BTC to a bitcoin address. This is the easiest way to make a transaction on the Bitcoin network.

Transactions blocked over time

A time-blocked bitcoin transaction is a type of smart contract that controls the spending of bitcoins until the end of a given period. Time locks are very popular and are used in many smart Bitcoin contracts.

For example, a time-locked script may indicate that three signatures are needed to spend a certain amount of bitcoins before a specific time period, after which only one signature will be required. Blocked transactions over time are excellent because they help prevent loss of funds.

Multi-sign script

Unlike P2PKH scripts that require a signature, a multi-signature or multi-signature script may require multiple signatures belonging to multiple users. Multiple signature scripts work by creating an order where N public keys are stored in the script and an M number is needed to sign to release the funds.

This means that the amount of bitcoin blocked in this type of script can only be spent if M signatures are issued and each of them must match one of the N public key conditions. This concept is known as the M-de-N multisignature. In this case, N refers to the total number of public keys listed and N is the minimum number of signatures required to validate the transaction.

Script Payment Hash (P2SH)

Pay-to-Script Hash (P2SH) is an accredited standard for enabling the creation of complex scripts. P2SH script does not work independently. Instead, it includes the P2WSH script, which appeared after the SegWit update. The two scripts work together to allow bitcoin to be sent to the hash of any script.

Smart contract layers of Bitcoin: what is possible besides Bitcoin

Due to the limitations of the Bitcoin scripting language, Bitcoin developers have been working on new layers at the top of the Bitcoin blockchain to enable more complex smart contract development for Bitcoin-based applications .

The most notable layers for smart contracts built on top of Bitcoin include Graft holder, Liquid, Pila, Flashi RBG. Let’s take a brief look at each of the five projects.

Graft holder

Rootstock (RSK) is a smart contract platform that includes a complete Turing virtual machine to connect to the Bitcoin blockchain.

The Turing Complete Smart Contracts provided by RSK is a concept that was first proposed by computer scientist Nick Szabo in 1993. And because RSK works like a Bitcoin side chain, it allows developers to create decentralized applications protected by the network. bitcoin without being limited by bitcoin. scripting language.

Bitcoin DeFi applications are already running on RSK, powered by RSK Smart Bitcoin (rBTC). rBTC is linked to BTC 1: 1 and is created by sending the BTC to a multisig address managed by RSK PowPeg (bidirectional connection protocol).

Liquid network

the Liquid Network was launched in 2018 by a major blockchain technology company Blockstream. Although it has attracted relatively moderate use since its inception, it has been able to provide transactions tailored to the needs of brokers, stock exchanges, financial institutions, and market makers.

As a bitcoin side chain, the liquid network is designed for business needs and not necessarily for the average bitcoin user. The liquid network also uses Liquid Bitcoin (L-BTC) as its asset.

As a smart contract layer of bitcoin, it offers users the ability to provide assets in the form of tokens such as stablecoins. In addition, Bitcoin NFTs can also be issued on Liquid Network.

Pila

Stacks is a layer 1 blockchain that is connected to Bitcoin through its consensus mechanism known as the Transfer Test (PoX). Leverage the economic power, security, and stability of Bitcoin to bring smart contracts to Bitcoin.

For applications built into Stacks, as they are linked to the Bitcoin blockchain, the Bitcoin layer always acts as the final layer, while the smart contract is built into the Stacks chain.

Similar to other layers, Stacks addresses the usefulness and scalability of the Bitcoin network, while driving the development of a decentralized digital economy secured by Bitcoin.

Flash

The Lightning Network (LN) was first proposed by Joseph Poon and Thaddeus Dryja in 2015. It is a second-tier technology that uses payment channels to increase the ability of the Bitcoin network to conduct transactions efficiently. .

LN relies on smart multisig transaction contracts, called time-blocked hash contracts (HTLC), to allow lightning-fast bitcoin transitions with almost no commission.

The Lightning network was designed to help remove transactions from the main network (off-chain) from the blockchain, helping to reduce transaction fees and decongest the Bitcoin blockchain.

RGB

RGB is a collection of protocols that offers smart contracts for Bitcoin and the Lightning network. It is client-side and its smart contracting system works in layers two and three of the Bitcoin ecosystem.

RGB, unlike other smart Bitcoin contracts that exist, does not require the generation of a token. Instead, it contributes to the concept of separating the issuer from the smart contract, the evolution of the state and state owners. As a smart contract system, RGB uses blockchain as a state commitment layer and Bitcoin script as a property control system. The evolution of your smart contract is determined by an out-of-chain scheme.

Although the Bitcoin ecosystem does not have as many decentralized applications as the major smart chain chains like Ethereum, a growing number of Bitcoin developers are devoting their time and energy to building a decentralized economy at the top of the list. safest blockchain in the world. .
______
Learn more:
– Bitcoin Play-to-Earn Games: How Lightning Network allows players to win sats
– How to buy Bitcoin without ID in 2022

– Is Bitcoin mining alone coming back?
– I ‘Orange Pill’ a dozen Nocoiners in a week: here are the questions they had about Bitcoin

– The growing market Challenge to Bitcoin: what is already profitable?
– Physical elements in a digital world: 4 basic elements for Bitcoin users

Leave a Comment

%d bloggers like this: