Smart Contracts on Bitcoin

We have all heard of Decentralised Finance or DeFi. But, did you know that only calling something ‘decentralised’ does not make it decentralised? Users of so called Decentralised Applications or DApps on alternative chains have enjoyed the returns of getting in early on VC funded coins and using swaps and iliquid pools to do whatever they do over there. Bitcoin is decentralised, and nothing else comes close

Enter Discrete Log Contracts (DLCs). DLCs were made possible with the Segregated Witness softfork upgrade which occured back in 2017 by improving transaction malleability. Originally conceived by @tdryja, essentially DLCs are Bitcoin Oracle Contracts. DLCs allow users to interact with Bitcoin’s native properties, such as enabling smart contract functionality like creating non-custodial options and futures contracts.

Discrete Log Contracts are decentralised in code and math, as apposed to wrapped btc (WBTC) on ethereum where the coins are held by the custodian, namely BitGo. With DLCs, its your keys and your coins, not wrapped versions of the real thing that de-pegs from time to time. That’s not even the best part.

  • DLCs are all on the Bitcoin base layer
  • No rehypothecation
  • On-chain verifiable
  • They are peer-to-peer by design
  • The On-chain footprint is the same as a 2-of-2 multisig.

These things develop very slowly with security, testing, and rigorous development taking priority above all else, all without a marketing budget. How can users give DLCs a try today? Atomic Finance has launched their Beta for users to earn returns on their bitcoin while holding their own keys by making use of covered calls.

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