With the Bitcoin halving and the launch of the Runes protocol this weekend, Dfinity will continue the Internet Computer’s embrace of the Bitcoin ecosystem by adding support for etching Runes tokens and other BTC-centric features, the company said on Tuesday.
Dfinity, wading into the increasingly crowded ranks of developers preparing to launch Runes, said its “Bitcoin Layer Zero” upgrade makes it possible to etch Runes, send and receive BRC-20 tokens on the Bitcoin blockchain, and create Bitcoin DeFi applications.
Internet Computer’s latest Bitcoin integration comes via the implementation of Threshold-Schnorr signatures, which will allow ICP’s smart contracts (which power decentralized applications (dapps) and other on-chain activities) to read Bitcoin addresses and sign on-chain transactions. Full implementation is expected this summer.
“Threshold-Schnorr integration is primarily about power and efficiency,” Aisling Connolly, senior research scientist at Dfinity, told Decrypt, adding that it is “simpler than the existing bitcoin signature scheme, ECDSA, and therefore easier to analyze and say meaningful things about security.”
Launched in 2021, Internet Computer is a decentralized blockchain network that aims to replace traditional cloud services with a globally distributed system.
In January, Bitcoin Layer 2 developer Bitfinity unveiled plans to create Bitcoin Ordinals via ICP using an Ethereum Virtual Machine (EVM) sidechain, and in November, Bioniq launched a Bitcoin Ordinals market on the ICP network.
Interest in Bitcoin’s NFT-like Ordinals and the upcoming Runes protocol has fueled a surge in development activity on the Bitcoin blockchain, and on Monday, investment firm Franklin Templeton Digital Assets said Runes could close the fungible token gap between Bitcoin and Ethereum and Solana.
As Connolly explained, by adopting Threshold-Schnorr signatures, smart contracts can interact directly with Bitcoin’s blockchain and verify transactions, providing developers with the necessary tools to create efficient, low-cost and non-custodial layer 2 solutions, sidechains or dapps.
“The core technical challenge of any distributed cryptographic protocol is the initial setup of private keys, ensuring that the system can operate with the required security guarantees,” Connolly said. “ICP has a distributed key generation protocol that is the result of decades of research and will be used for both initial Threshold-Schnorr key setup and key refresh.”
Connolly highlighted ICP’s two-pronged strategy to attract bitcoin developers, including enhancing existing applications to become more decentralized and supporting the development of new protocols. She acknowledged that some bitcoin holders may not want to use ICP to interact with the original blockchain, but said skipping the Internet Computer would be a mistake.
“While it’s true that individuals may not need an ICP to enroll in Ordinals,” Connolly said, “if a developer wants to build a secure application that doesn’t require a hosted bridge, has a 1.5 second finalization time, has negligible fees, and works fine right now, there’s nowhere else to do it.”
Halving highlights why Bitcoin needs an upgrade
Around April 20 of this year, Bitcoin will undergo its most recent halving event, which means that miners’ rewards will be reduced by 50%. Overall, this event is seen as bullish for Bitcoin. Past halving events have been accompanied by significant increases in Bitcoin prices. Of course, this is at the direct cost of revenue for those who mine the asset.
Bob Bodily, CEO and co-founder of ICP-based BTC Ordinals marketplace Bioniq, recently spoke to CoinDesk about some of his thoughts.
He said this halving may be different. The recent implementation of new protocols that provide enhanced functionality, as well as billions of dollars of capital flowing into Bitcoin ETFs, have changed the nature of the market and demand for the asset. After the halving, we may see different activity on the network than before, pushing up fees and helping to compensate for the reduced block rewards.
However, in order to take advantage of this, Bitcoin now needs to be fundamentally changed to address the issues that are hindering wider adoption.
Entering the halving period
The most recent halving occurred at a time of significant development for assets and protocols, most notably a surge in Bitcoin Ordinals and BRC-20 tokens compared to the previous year. These assets have come to be understood as NFTs that actually run on top of Bitcoin, unlocking new capabilities for the ecosystem that had never been possible before.
The popularity of these new digital products could have a significant impact on miner revenues after the halving. While the event itself slashes the rewards for mining blocks, Ordinals and BRC-20 drive up network fees due to their relatively high registration and transaction costs.
More importantly, this halving will launch a brand new asset on Bitcoin - Runes. Developed by Casey Rodarmor, the inventor of Ordinals, Runes are designed to be a more efficient way for users to issue fungible tokens on the network as a similar but new evolution of the idea of building assets on top of existing blockchains.
Despite Rune’s efficiency, it still represents another asset that will be in demand in the post-halving era, further driving up Bitcoin blockspace demand, network activity, and subsequently miner fees, which combined with the recent influx of funds from ETFs will offset, if not completely replace, the revenue previously generated from mining rewards alone.
The result could be that this halving may not have the same impact on miners as previous ones, potentially reinforcing the market’s eventual reaction.
We need to update Bitcoin
High fees may be good for miners, but they will also drive the development of a decentralized world on Layer 2, ultimately leading to liquidity silos and hurting the end-user experience. Higher fees may also hinder global adoption, especially for price-sensitive users in developing countries who may need Bitcoin the most.
To unlock the possibilities offered by the best minds in Web3, developers need access to the tools to build easily, efficiently, and interoperably on top of Bitcoin, however, to achieve this, changes need to be addressed at layer one.
Fortunately, some paths forward that are not built on top of layer 2 are currently being explored, for example there is a proposal to reintroduce the "OP_CAT" opcode which would allow multiple script variables to be concatenated into one, which would significantly improve The ability for developers to build on top of the network and deploy new services in a highly integrated manner.
Meanwhile, there is another proposal to implement so-called CTV, which would place restrictions on how Bitcoin transactions can be spent. All in all, these potential updates represent a layer 1 blockchain that is built to be more efficient and secure, which should attract new development.
Of all the potential opcodes we could add to Bitcoin, CTV and CAT are the top two contenders. For developers, CTV is a no-brainer upgrade to Bitcoin. It’s simple, elegant, and adds meaningful functionality to the network through contracts. Unfortunately, CTV has had some political issues gaining widespread support.
Then we have groups like Taproot Wizards who have released a collection of Ordinals Cats, Quantum Cats, specifically to draw attention to OP_CAT and push the network to officially add CAT, which originally existed in Bitcoin (removed early on) at just 10 lines of code and has significant support for adoption by all major groups within Bitcoin.
There is no guarantee that these proposed updates to Bitcoin will become accepted or final solutions that bring better functionality and adoption to Bitcoin, that being said, they put the blockchain in the best possible position to take full advantage of the implementation of new protocols like BRC-20 and Runes.
If enabled soon, this could mean the difference between a slight offset to the reduction in mining rewards and an across-the-board increase in fees (making miners more profitable than before), and the community should pay attention because this distinction could have huge implications for the future of Bitcoin itself.
Online Events
The rumors are true! ICP is hosting an online Bitcoin halving celebration to welcome the next Bitcoin era!
We invite you to join the top Bitcoin dapps in the ICP ecosystem, get exclusive information and major alphas, here’s what you need to know:
When: Friday, April 19, 11am ET / 5pm CET / 23pm GMT+8
Live Link:
youtu.be/k7krZywHvNU
Offline event announcement
From May 9 to 10, 2024, Bitcoin Asia 2024 Hong Kong Bitcoin Conference, hosted by The Bitcoin Conference, the world's largest Bitcoin conference company, announced that it will be held at the Kai Tak Cruise Terminal in Hong Kong. This is another highly anticipated large-scale conference following the 2023 Miami Bitcoin Conference. It is also the first time that a Bitcoin conference has entered the Asian market, which has set off a wave of discussion in the crypto industry.
The Bitcoin Conference chose Hong Kong as its first stop in the Asian market, which is a historic move in itself. On the one hand, the most influential core group in the crypto industry has seen Hong Kong’s friendly and stable policies on crypto development. On the other hand, Hong Kong is the best geographical choice to link and integrate Eastern and Western cultures with the Bitcoin ecosystem.
The Bitcoin Summit is one of the most important cryptocurrency events in the world and one of the largest financial summits in the United States. It attracts top figures from all walks of life. There are not only experts from the fields of finance, technology, etc., but also celebrities from sports and politics, such as Salvadoran President Nayib Bukele, Serbian Prince Filip, American politicians RFK and Tulsi Gabbard, etc. Technology industry giants such as PayPal founder Peter Thiel, former Twitter CEO Jack Dorsey and sports stars such as NFL's Aaron Rogers and tennis player Serena Williams will also participate. The Bitcoin Summit has become a key platform for releasing major industry announcements and has launched many technical and regulatory updates in the field of cryptocurrency.
Ticket purchase entrance
General admission tickets to the conference are priced at $249, while exclusive Whale Passes that include VIP passes and privileges are priced at $3,999. Student tickets are $30, and official conference T-shirts are $35. Ticket purchase link:
asia.b.tc
For more information, please visit the website:
b.tc/conference/zh-hk/asia
Please follow The Bitcoin Conference on Twitter (@thebitcoinconf) for the latest conference news and updates (Editor’s note: prices may increase in the future, so buy your tickets as soon as possible!).
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