Taproot is a year old and the Bitcoin community is working to unlock its DeFi potential
Smart contracts functionality on the Bitcoin network could increase adoption and provide liquidity to DeFi. News Own this piece in crypto history. Collect this article as NFTTaproot support is still crawling one-year after the Bitcoin soft fork. Sources told Cointelegraph that there is strong potential for innovation and wider adoption of Web3 solutions through the world’s most popular cryptocurrency. “Satoshi predicted early that layers would be built on top the Bitcoin blockchain to enable Bitcoin to move beyond just being sound money. This will allow Bitcoin to add programmability which makes Bitcoin the ideal framework to build out Web3 capabilities,” stated Alex Miller, CEO of Hiro, the Web3 developer platform. Taproot was upgraded in November 2021. This upgrade laid the foundation for decentralized financial services via the Bitcoin (BTC). It allows for faster validation of multisignature scripts. This addresses privacy concerns and improves block storage. These changes were long anticipated by the industry as many Bitcoin holders don’t use their coins for decentralized finance (DeFi). “This involves the cumbersome task to wrap it using a bridge so it can be processed smart contracts on another Blockchain such as Ethereum,” said Dominic Williams, founder of DFINITY, which is the foundation behind the Internet Computer blockchain. This company is working to unlock Bitcoin’s potential for DeFi. Internet Computer announced its mainnet integration to the Bitcoin network on Dec. 5. This will allow smart contracts to hold, send, and receive BTC directly without the need of third parties or blockchain bridges. This was one of the targets of hackers during 2022, when billions were stolen. According to the company’s decentralized blockchain, almost every DeFi application will incorporate Bitcoin because of the liquidity it provides. Users who want to participate in DeFi can send their coins to Bitcoin’s smart address and withdraw the coins directly from their wallets. “Soon, you will be able send a simple chat message such as Happy Birthday! Here are 100,000 satoshis. Williams noted that Open Chat is a fully on-chain Web3 platform. Web3 enabled on the Bitcoin blockchain means more trust in cryptocurrencies, DeFi applications, said Alex Miller. “The recent implosions of centralized entities such as FTX will only serve the purpose to keep pushing forward interest truly decentralized finance – where transactions can be secured algorithmically at consensus level and users don’t have to trust third party custodians with their coins. Because of its history of pioneering decentralized trust Bitcoin is the best place to conduct DeFi transactions. Miller said that while Decentralized autonomous Organizations (DAOs), could also benefit from Bitcoin’s smart contracts functionality, DeFi is expected to account for the majority of the growth. People want to know that the blockchain they put their money into will still be around in a few years. Bitcoin has a track record of doing this. Investors and developers alike seek out safer assets to focus on in bear markets. Bitcoin is a special case. DeFi will be the largest point of growth in our ecosystem, according to my projections for 2023. “Bitcoin has been around for almost 14 years and has seen many hard and soft forks, all driven by the crypto community. The Covenants, described in Bitcoin Improvement Proposal 119, could be one of the upgrades. It would limit the address to which a user can send their money.