One year after the Taproot update, the Bitcoin community is unlocking the potential of DeFi

One year after the Bitcoin forkIndustry-wide support for Taproot is still slowing, sources told Cointelegraph, pointing to strong potential for innovation and increased adoption of Web3 solutions that will be unlocked by the world’s largest cryptocurrency.

“From the beginning, Satoshi predicted that layers built on the Bitcoin blockchain would allow Bitcoin to go beyond being just hard money by adding programmability, making Bitcoin the perfect framework for developing Web3 capabilities,” said Alex Miller, CEO of the developer platform. Web3 Hero.

Taproot update in November 2021 and lay the foundation for accelerating decentralized financial services through the Bitcoin network (BTC). It enables more efficient verification of multi-signature scripts, which addresses privacy concerns, and improves block storage by reducing the volume of complex transactions that occur on the network.

The changes were highly anticipated in the industry, as many bitcoin holders do not use their coins for decentralized finance (Decentralized Finance) applications (DeFiOne of the companies working to unleash the potential of Bitcoin for DeFi, said Dominic Williams, Founder and Chief Scientist at DFINITY, the organization behind the Internet Computer Blockchain.

Internet Computer announced on December 5 that its mainnet has been integrated with the Bitcoin network, serving as a second layer where smart contracts can hold, send, and receive BTC at the origin without the need for third parties or blockchain bridges, which was one of the goals of the hackers. In 2022 when billions of dollars have been drained. According to the company, all DeFi applications built on the online blockchain plan to integrate Bitcoin because of the liquidity it provides.

Thanks Jobs Smart contracts For Bitcoin, users who want to participate in DeFi will be able to send their coins to a Bitcoin smart contract address and withdraw them directly from their wallets. “Soon you’ll be able to send a simple chat message, like ‘Happy Birthday!'” Williams said. Here’s 100,000 satoshis, using a fully on-chain Web3 service like Open Chat.

Enable Web3 on the Bitcoin blockchain It also means more trust in cryptocurrencies and DeFi apps, Alex Miller stated:

“Recent collapses of centralized entities like FTX will only increase interest in true decentralized finance, where transactions are algorithmically secured at a consensus level and users don’t have to trust third party custodians to ‘do the right thing’ with their coins. Given its history as a pioneer in Decentralized trust, Bitcoin is the most logical place for people to transact with DeFi.”

Decentralized Autonomous Organizations (DAOs) could also benefit from the smart contract functionality of bitcoin, according to Miller, but DeFi is likely to account for most of the growth. “People want to know that the blockchain they invest time and money in will still be around two years from now. In bear markets, developers and investors alike are looking for safer assets to focus on, and Bitcoin will always be uniquely special in this regard, and given the In 2023, I believe DeFi will be the biggest growth point in our ecosystem.”

For nearly 14 years, Bitcoin has undergone several hard and soft forks led by the cryptocurrency community. Upcoming updates could include charters, which are described in Bitcoin Improvement Proposal (BIP) 119 and will list the address a user can send their funds to.

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