Author: Lorenzo Protocol Source: Medium Translation: Shan Ouba, Bit Chain Vision

Although Bitcoin initially launched the purpose of becoming a global point -to -point digital cash system in order to become a global point -to -point digital cash system, the prospects of cryptocurrencies have far exceeded the initial use cases.

Many additional cases are developed on the alternative blockchain with more expressive script language, such as Ethereum and Solana, because Bitcoin scripts are quite limited in terms of overall function.

By using some expressive cryptocurrency script languages, replacing blockchain can attract millions of users. The interest of these users is not just to watch the rising or unchanged transactions.

But what exactly is smart contract?Why do all these developments happen outside the Bitcoin network?Is it possible for Bitcoin to use all these alternative cases of blockchain technology?Let’s take a closer look at the increasing intersection between Bitcoin and smart contracts.

Understand smart contracts

Smart contracts are any types of contracts forced by code rather than traditional legal systems or other concentrated agencies.This code is usually deployed on a decentralized, blockchain -based network.As early as 1994, the famous Code Punk Nick Szabo discussed the smart contract for the first time. About 20 years ago, the concept was popularized by the launch of Ethereum.

The scope of smart contracts can be achieved from the simplest realization to highly complex.For example, standard Bitcoin transactions are smart contracts.Once Bitcoin users sign the transaction with their private key, the bitcoin is transferred to another address through the blockchain force.On the other hand, decentralized finance (DEFI) protocols on various blockchain networks can combine a series of different smart contracts into larger applications, such as creating derivatives -based synthetic tokens and automation as the city.Merchants conduct decentralized transactions.

It should be pointed out that in the past ten years, the term smart contract has expanded to any use of password science in the financial community, because many platforms have used it as more popular words that attract investment.For example, it can be said that the so -called smart contract involves some trusted third parties (usually in the form of prophecy machine) as part of its design, not the real smart contract, because the execution of the contract is basically in the hand in the hand.Three parties.In other words, the expected result of code execution is not necessarily the ultimate rule in these scenes.

Advantages of smart contracts

So why would anyone use a smart contract on the blockchain instead of the traditional protocol supported by the local legal system?Some of the main potential advantages of smart contracts include:

There is no “credible” third party: the most authentic smart contract does not involve any trusted third parties to resolve the dispute.As Saab once wrote, the trusted third parties are security vulnerabilities, which may cause problems such as costs and reviews.Lack of third parties is also the basic feature of smart contracts to achieve other advantages.
Improve transparency: By issuing smart contracts on the public blockchain, anyone can verify the contract rules for free and the execution of these rules.This can improve transparency, and the equivalent system in traditional contracts does not exist in this transparency.For example, all transactions that occur on decentralized exchanges such as Uniswap can be viewed all over the world.
Increasing privacy: Smart contracts are also contradictory to provide transparency and privacy, but the smart contract system can be constructed according to different goals.The core concept of Bitcoin smart contract is to leave as little information as possible on the blockchain, which provides more privacy for those participating in these contracts.For example, if the blockchain observer cannot judge whether the Bitcoin transaction on the Bitcoin on the chain is a standard payment or the opening of the lightning network channel, this will be beneficial.In addition, some smart contract design (such as Coinjoin) is specially constructed to improve user privacy.
Disar -induced: Once the smart contract is deployed on the blockchain, it cannot be changed (unless the initial design of the smart contract allows).This enables all parties to accurately understand how the contract rules will be implemented in all potential results.Of course, it should be pointed out that smart contracts are as unchanged as the underlying blockchain, just as the hacker attacks on DAO (also known as Genesis Dao) on Ethereum in 2016 are reversed.
Improve speed and efficiency: Although traditional contracts may involve manual document work and legal procedures, once the trigger factor that meets the final solution, the smart contract can be completed immediately.
Lower cost: According to use cases, smart contracts issued on the blockchain can provide lower costs lower than other options.For example, it is usually cheaper to send transactions through stable currencies instead of bank electricity exchange.In other words, smart contracts are not a cheaper choice in all cases, because interaction with public and decentralized blockchain may be much higher than the cost of centralized databases.Just like the smart contract itself, the blockchain has become a technology promoted by buzzwords, and people sometimes turn to it out of desire but not necessary.
Borderless: Smart contracts are published on the blockchain and operate on the basis of the Internet and do not need permits through the Internet.This means that any two parties from all over the world can reach an agreement on contract terms -even if they are located in different judicial jurisdictions that have traditionally collaborated.

Bitcoin limited script language

Contrary to the general view, there are smart contracts on Bitcoin.Many people have more smart contracts with other blockchains such as Ethereum and Solana. The reason is that the limited script language of Bitcoin means that things that can be completed on the basic blockchain are limited.

In Ethereum, the writing decentralized application is basically unlimited, because developers can write smart contracts from scratch.In Bitcoin, the primitives of each smart contract are proven to be useful and worthy of the security balance, which will be effectively added as needed over time as needed.

For example, OP_CHECKLOCKTIMEVERIFY (CLTV) and OP_CHECKSEQUENCEERIFY (CSV) operating code are added to Bitcoin because they can be used as a built -in block of the Lightning Network, which is considered a key expansion breakthrough in Bitcoin payment.On the other hand, complicated, smart contract -based applications (such as Uniswap and Maker) cannot be constructed on the basic Bitcoin blockchain at all, because the development of their tools does not exist in Bitcoin Script.

It is worth noting that the limit of Bitcoin script was intentionally implemented by Bitcoin creator, Nakamoto, who was intentionally implemented.Bitcoin was initially launched with additional operating codes, such as OP_CAT, but these operating codes were no longer active on the Internet because Satoshi Nakamoto stopped them because of security considerations.Some problems that Bitcoin can avoid through this design decision include to prevent stable currency issuers from obtaining unnecessary control of the network and potential issues related to miners’ extraction value (MEV).

In other words, you can now write some smart contracts on Bitcoin through various mechanisms.Here are some smart contract types that can be written in the current form of Bitcoin script:

Multiple signature address: Multiple signature address is a bitcoin address. As shown in the name, multiple signatures are required to send transactions.For example, companies or organizations may require two -thirds executives to sign each transaction from the financial department.This is a smart contract that exists on the basis of many Bitcoin applications, which can achieve improved wallet security, combined side chain and lightning network.
Time locking transaction: Time locking transaction is used to prevent some specific Bitcoin before a certain time in the future.For example, someone can use this type of smart contract to prevent them from spending their own savings in the future, or prevent relatives from spending their legacy before reaching a certain block height.In addition to the NLOCKTIME parameter, CLTV and CSV are two operating codes that enable this smart contract function.These operating codes are also a key constructing block for the lightning network and cross -chain atomic exchange. The encryption certificate is used to prove that it has made a promise of a linked expenditure.
Tokens: Although the tokens did not really become popular until Ethereum was implemented, the reality was that since around 2013, various meta protocols used to issue alternative assets on Bitcoin have existed.It was originally called colorful coins. The meta protocol was used until the invention of the serial number and inscription in 2023, and the Bitcoin’s tokens were widely used.In other words, Tether USD is by far the largest stable currency in the world. It was originally issued on the Bitcoin dollar agreement named MasterCoin (now Oumney).Other meta protocols for the issuance of alternatives and non -alternative tokens (NFT) on Bitcoin include Stamps, RGB, TAPROOT Assets, Runes, and Counterparty.
Discrete Log Contract (DLC): DLC is the answer from Bitcoin to the question of smart contract prophecy. Among them, the third party must trust the results of the bet between the two or more parties.This mechanism provides a lot of privacy and scalability for such bets, because most data are processed outside the blockchain.It is worth noting that the prediction machine of the smart contract does not necessarily know the details of betting.DLC can be used to create financial derivatives on the basic Bitcoin blockchain and lightning networks.

It should be pointed out that sometimes multiple Bitcoin smart contracts are also combined to create more advanced upper -level protocols.For example, multiple signature addresses and time locking transactions are used to create lightning networks.

Bitcoin’s vision of private and efficient smart contracts

Although the basic protocol layer of Bitcoin is difficult to change, over time, the consensus rules of the network have changed to enable additional intelligent contract functions.For example, although multiple signature addresses are very common on today’s Bitcoin network, they are not available in the original version of the agreement.

2021 年，比特币中添加了一项名为 Taproot 的改进，旨在增强智能合约的隐私性和效率。In fact, as far as the design goals related to the amount of information related to the implementation of smart contracts that are always stored in Bitcoin blockchain are always reduced, this improvement is a big step forward.In addition to extremely focusing on security, Bitcoin smart contracts are often implemented under linked ways, which can maximize privacy and scalability.

The Taproot upgrade coincides with Bitcoin’s additional Schnorr signature, which makes multiple signature transactions look no different from traditional single -signing transactions on the blockchain.This means that, for example, the opening or shutdown of the Lightning Network channel looks the same as on the normal chain trading. Among them, Bob only sends some bitcoin to Alice.In addition to the use of signature aggregation to reduce the amount of space you need to use, this makes it difficult to understand the true meaning behind the interaction on the Bitcoin user chain.

此外，默克尔化抽象语法树（MAST）的使用使得只有智能合约的执行形式才会在区块链上显示。Although specific smart contracts may produce many potential differences, MAST improve privacy and scalability by publishing data related to the final result of smart contract executions.然而，应该指出的是，当存在某种需要通过恢复到区块链来解决的链下智能合约纠纷时，会披露更多数据。

Taproot 还使得未来引入新的操作码变得更加容易，这些操作码可以用作更具表现力的智能合约的构建块。Tapscript 是通过 Taproot 升级引入的，它还附带 OP_SUCCESSx 操作码。这些实际上是未来操作码无缝添加到比特币的占位符。

Having said that, it is worth mentioning that Taproot is the last soft fork change to Bitcoin.Over time, such changes have become more difficult than Bitcoin, because the rules of network protocols are slowly rigid.As the Bitcoin user base grows and becomes more and more diverse, the change in coordination of the Bitcoin script language may become more difficult even if it is not unrealistic.

Bitcoin smart contract on the secondary layer

As part of the desire to restrict the interaction with the basic blockchain layer, the multi -layer methods that have expanded cryptocurrencies to billions of potential users over the years have always been considered the right forward road.It is worth noting that in the past few years, Ethereum has also shifted to the second floor (L2) network.

Most financial activities involving Bitcoin assets do not necessarily require high decentralization and review resistance provided by Bitcoin Blockchain. Therefore, letting users choose to enter the secondary network built on the basic layer through smart contracts.Essence

The most famous L2 network on Bitcoin today is a Lightning Network, and it is currently focused on payment use cases.Although the Lightning Network itself is built on many different Bitcoin smart contracts, this L2 does not provide too many functions in enabling additional smart contract functions.However, the Lightning Network does allow smart contracts (such as tokenization and DLC) that exist at Bitcoin’s basic layer (such as tokenization and DLC).

As far as the expansion of Bitcoin smart contract function is concerned, most activities have been carried out on the federal chain so far.LIquid is a very similar side chain that is similar to Bitcoin itself, with various additional functions and operating codes.Another side chain appears in the form of rootstock. It is compatible with Ethereum virtual machine (EVM), which means that any Ethereum application can be deployed on the side chain.

Although Liquid and RootStock have conducted more experiments in Bitcoin in smart contracts, the use rate of these platforms is quite low.This may be caused by a variety of reasons. For example, the cost of not like to combine side chain security models, or the cost of basic Bitcoin blockchain is still relatively low in the overall solution.Of course, many smart contract systems will re -introduce a certain form of risk of trading opponents in any case, which usually appears in the form of trusted prophecy.Then again, many Bitcoin users generally tend to simply hold Bitcoin, rather than re -introduce financial risks.

Because of innovation such as Babylon and BITVM, replacing side chain security models is now possible, which has led to the development of equity -based proof (POS) models.Whether these new forms of L2 Bitcoin network can get more attention than previous side chain iterations, it remains to be observed, but the level of L2 experiments will be increased in the next few years.

Of course, it can also be considered that other first -level blockchain networks, such as Ethereum and Binance Smart Chain, can also be regarded as the second layer of Bitcoin.In fact, the number of Bitcoin of Bitcoin (WBTC) ERC-20 to Ethereum via Wrapped Bitcoin (WBTC) Etan to Ethereum makes the total scale of lightning networks, liquid and rootstock.Some networks running between side chains and alternative cryptocurrency networks, such as Stacks, there is a new local cryptocurrency, while focusing on the use of Bitcoin as currencies.

The popular application of Bitcoin smart contract today

Although it can be technically able to build a decentralized application through the intelligent contract on Bitcoin today, reality is that there are currently no popular examples that can be called successful projects.WBTC is a popular tokens used in the largest and most famous DEFI projects (such as UNISWAP and AAVE). However, when building such applications directly, there are no examples of products that match the market.

In other words, so far, there are three notable highlights in the use of Bitcoin smart contracts to build decentralized applications: Sovryn, Lightning Network and Ordinals.

Sovryn

Sovryn is a Bitcoin application that basically supports all the functions that people can find in various applications built on Ethereum.Sovryn was originally deployed on RootStock, and it is expected to be deployed on Build on Bitcoin in the near future.DEFI applications have everything that Bitcoin users may want in DEFI activities, including decentralized exchanges, stablecoins supported by mortgages, NFT, lending, decentralized autonomous organizations (DAO), pledge, and so on.

As early as November 2021, the total value (TVL) locked by the SOVRYN protocol reached a peak of about 160 million US dollars. As of writing this article, about half of the amount was locked in the DEFI application.

Lightning network

Although the Lightning Network has long been hailed as the main L2 development of Bitcoin so far, it has yet to be questionable.Although there are more cottages that are mainly paid on the Lightning Network, there are still some problems that need to be solved.In fact, many most popular and noticeable lightning wallets, such as Satoshi Satoshi Wallet and Chivo wallet, run in a fully managed manner.

At any time, the number of Bitcoin locked in the lightning network is relatively small, which is usually considered to be evidence of failure, but the reality is that TVL is not a very useful indicator to measure the success of Bitcoin.Payment agreement.At present, most of the activities in the Lightning Network are established around low -value transactions related to NOSTR and games. These cases do not require too many Bitcoin on the Internet, especially considering that the same bitcoin can be repeatedly used for multiple times for multiple times.Payment in a conscious circular economy.

Serial number and inscription project

Based on the temporary rise in Bitcoin’s trading costs in the past year, the serial number and inscriptions have attracted widespread attention and controversy.Although some Bitcoin users regard the order of order as a healthy integration of Bitcoin NFT concepts, others believe that a large number of block space occupied by the inscription is just spam.

In addition to the Ordinals series similar to NFT, there are many MEME tokens launched through this process.According to Cryptoslam, as of April 2024, Bitcoin has now become the largest blockchain of NFT, and the concept of Ordinals has always been the key driving force behind this phenomenon.

The future of Bitcoin smart contract

It may be extremely difficult to change Bitcoin, but it has made some progress through soft forks to introduce additional smart contracts to Bitcoin.In addition, a large number of upper network development is underway, and these development will cooperate well with the existing basic Bitcoin protocol.There is no doubt that Lightning Network, side chain and other existing Bitcoin smart contract systems will also be improved.

Although most smart contract activities currently occur on Ethereum and its second floor network (even involved Bitcoin activities), in the long run, Bitcoin as a combination of assets and smart contracts may change the current currentexample.

Will the new operation code be soft to Bitcoin?

When Bitcoin Network was launched for the first time in January 2009, the basic rules of the Bitcoin network must be “unchanged” to some extent.However, through the backward compatible soft fork, the agreement will make some subtle changes from time to time.Multiple signature addresses, smart contracts related to Lightning Networks, isolation witnesses and Taproot all came to Bitcoin through this method, and there were many proposals to add new smart contracts to the Bitcoin script in Ethereum.

contract

The Bitcoin contract will allow users to better set the condition of how, when or where to send Bitcoin.For example, the contract may only be allowed to spend some bitcoin to some specific addresses after a certain period of time.Effectively enhance the ability to control and increase restrictions on Bitcoin expenditure conditions to achieve various use cases and improve the existing smart contract systems that exist on Bitcoin today.

In the past few years, various Bitcoin developers have released several contract proposals.Some of the most famous Bitcoin contracts include OP_CHECKTEMPLEMPLEVERIFY (CTV) and OP_CAT. The second proposal is available in the original version of Bitcoin before being used by Satoshi Nakamoto.Bitcoin developers have been arguing about the advantages of many different contract proposals, because they want to achieve appropriate balance between more programming without increasing the complexity of the Bitcoin attack surface.In addition, some people said that increasing the contract is not worth weighing at all because it has not been verified.

Potential use of contracts

One of the key cases of the contract discussed for a long time is the concept of the insurance library. It will provide additional layers of protection to prevent theft and hacker attack.The basic idea is that the Bitcoin held in a certain address can only be used in a predetermined manner to suppress the enthusiasm of the attacker.For example, the funds may be sent to the middle address, and then the user selected by the user may need to be sent to the user, and the time lock is also added to the intermediate address to allow the legal owner of the Bitcoin to prevent the theft of attempts.Today, a simple version of the vault can be achieved on Bitcoin; however, if Bitcoin has a contract, they can become more efficient and secure.

The contract can also improve the existing Bitcoin network (such as the Lightning Network and the side Chain).As far as the Lightning Network is concerned, the contract can achieve improvement. For example, a channel factory, it allows lightning users to interact with the basic Bitcoin blockchain at a lower frequency, thereby reducing total costs.For side chains, the contract may help improve the safety and efficiency of various two -way hook mechanisms.There are also the potential of improving the privacy -centric protocol (such as Coinswap), development and congestion control, and improving the potential of other L2 networks (such as ARK and Mercury Layer).

Transmission chain

As mentioned earlier, there are already side chains on Bitcoin; however, the current implementation depends on the security model of the signature alliance behind multiple signature addresses.There is also a model based on equity proof, but the driver chain will provide a third option. The funds on the side chain are controlled by Bitcoin miners.

At present, the driver chain is a controversial proposal, but some parts of the Bitcoin user group believe that they are the best solutions to solve the problem of two -way hook problems and will provide the highest degree of review resistance for the side chain.Critics believe that the driving chain has changed the game theory at the basic network by placing a large number of Typton in the collective hands of the miners.In other words, the ultimate goal here is to enable low -trust Bitcoin side chains to conduct higher -level experiments on smart contracts and other cases.

It is worth noting that a version of the driver chain can now be implemented through the BITVM; however, it will become safer by introducing two bitcoin improvement proposals (BIP): BIP 300 and BIP 301.

Simplicity

Simplicity is a advanced advanced Bitcoin script language developed by Blockstream, which can provide formal verification and more expressive smart contracts.Blockstream CEO Adam Back integrates simplicity into Bitcoin as the potential “final soft fork” because it may cause the basic protocol to rigid.

In the simple Bitcoin world, the development of Bitcoin smart contracts will be more like in the Ethereum world, and developers can freely write any smart contract they want.Simplification also provides formal verification, which means that smart contracts can be proved to be fully met with expectations before use, which can limit security issues and errors.The Solidity script language of Ethereum does not exist in this function. A large number of intelligent contracts that have been prone to errors over the years have led to a loss of billions of dollars.Nowadays, adding Simplicity to Bitcoin will be considered very controversial, but it is expected to add it to the liquid side chain at some time in 2024.

Better Bitcoin side chain

Looking forward to the future, the side chain will become a key area worthy of attention in the development of Bitcoin smart contracts, because these L2 networks can provide more experiments.As Bitcoin continues to expand through multi -layer methods, it is likely to try a large number of new side chain concepts.

There is still a lot of room for improvement in two -way hook, which enables Bitcoin to move back and forth between the basic chain and the L2 network.For a long time, a system based on zero -knowledge -based proof may become the ultimate link mechanism for these Bitcoin secondary layers.

Lightning Network will continue to develop and expand

As far as its function set is concerned, the Lightning Network is still quite basic; however, this situation will definitely change in the near future.The two latest development of the Lightning Network may lead to a higher level of adoption, which is Taproot assets and DLC.In the past few years, stabilization currency has been a key area used in the cryptocurrency market. Since the rising costs on the chain and the Tether USD (USDT) have slowly turned to the replacement network, the Bitcoin ecosystem has missed this opportunity.

Through Taproot Assets (and other similar protocols), stablecoin can be issued on Bitcoin and sent through the lightning network to make it a faster and cheaper alternative to other blockchain networks such as Ethereum and TRON.With the help of DLC, use cases such as holding and minimum trusted derivatives linked to the US dollar can be enabled on the Lightning Network.

As mentioned earlier, adding contract proposals or simplicity to Bitcoin can also help Lightning Networks to become more efficient in using the basic Bitcoin blockchain, and there are still a lot of work in expansion to do this L2 network for potential global potential global potential.Billion users.

Looking forward to the future, the lightning network may act as adhesives more, allowing users to basically exchang them immediately between various L2 Bitcoin networks.In other words, as far as the funds on the Internet are concerned, the Lightning Network is regarded as L2, which has the minimum trust assumptions, because lightning transactions are only in one block that has not been broadcast and contains self -hosting Bitcoin transactions.

There are also technologies similar to Lightning Networks are online, which can provide alternative options for specific cases.Fedimint is an electronic cash system based on the United Bitian hosting (similar to liquid), which can achieve fast and cheap anonymous transactions.In addition, ARK is a updated concept that can solve some liquidity and privacy problems found in the Lightning Network.

The current form of Lightning Network still has some limitations, and it is definitely not a pitch to expand Bitcoin to the global population.Instead, it is one of the potential tools that allow anyone to use Bitcoin to maintain a certain degree of decentralization and review system.

Bitcoin is ready to welcome the prosperity of smart contracts

The future of Bitcoin smart contract is now.For those who want to deploy smart contracts on the most valuable cryptocurrency network in the world, there are already many tools for use, and these tools will become more powerful and secure in the next few years.Due to the emergence of Ordinals, Bitvm, and other recent breakthroughs, the construction of decentralized applications above Bitcoin is never as exciting as today.

At least since the release of the original side chain white paper in 2014, the idea of building everything around Bitcoin instead of split the cryptocurrency user base into many different, compatible system ideas.EssenceThere is no reason for everything to be built on Bitcoin, as the core source of the dispute between the truth and smart contracts.