It was announced recently that Dfinity Foundation, which underpins the Internet Computer blockchain, will be integrating with Bitcoin, enabling smart contracts on the cryptocurrency, as well as decentralized finance applications on the network by the end of the year
The new Smart Contract functionality for Bitcoin will eliminate the need for bulky and insecure trusted bridging services, according to Dfinity founder Dominic Williams' announcement.
DeFi is an important industry initiative for Bitcoin. By allowing lending, yield farming, derivatives, liquidity pools, and more, the pioneer crypto could become as ubiquitous as Ethereum, the current industry leader.
The Internet Computer was launched in May after long development and is a viable alternative to today's web infrastructure. It has been in development since 2016.
In order to achieve its massive goal, it plans to make the Internet into a global computer able to compete in the $370 billion cloud computing market by enabling decentralized, secure versions of popular applications such as LinkedIn, TikTok, and WhatsApp.
This goal relies heavily on smart contracts and interoperability with various blockchain networks, which will allow various software programs to communicate seamlessly.
To do this, Williams explained, "The Internet Computer employs chain key cryptography, which allows it to sign Bitcoin transactions as well as transactions in other blockchains.".
Four months after its launch, Dfinity claims that its Internet Computer has processed in excess of 200 million blocks; a striking difference compared to any other blockchain.
There are other projects that are working to integrate Bitcoin, however, the most popular method for doing so has been bridging technologies.
A DeFi ecosystem for Bitcoin is also being built out by the DeFi project Portal. The company announced an $8.5 million fundraising round a few days ago, with Coinbase Ventures and ArringtonXRP Capital participating.
Portal's Bitcoin-native method of multichain transfers goes online and provides an alternative bridging method for users who are increasingly active on the blockchain," said Michael Arrington, founder of ArringtonXRP and TechCrunch.
A major upgrade is scheduled for Bitcoin in November. Known as Taproot, the changes will simplify the process of creating smart contracts on the protocol.
Twitter founder Jack Dorsey, the founder of Square and a big fan of Bitcoin, is on board with the idea. TBD is a Square mobile platform that integrates Bitcoin and has been dubbed DeFi by the company.
However, regulators have also been paying attention to all that has been going on. As a result, they have heightened their vigilance regarding the sizzling hot field of defi. They are raising concerns about security and accountability.