Exploring the Role of Bitcoin in Building and Running DApps

In this post, we discuss how it may be a smart idea to build applications on top of the Bitcoin protocol

Bitcoin was never designed to support applications on its foundation layer, unlike new-generation blockchain systems like Cardano, Ethereum, or Solana. Bitcoin's founder, Satoshi Nakamoto, just imagined it as a peer-to-peer, censorship-resistant payment system. Since Bitcoin's underlying design is so basic, it has been challenging to build anything on it up to this point. For instance, unlike the majority of current blockchains, which employ Turing complete systems, Bitcoin uses a Turing incomplete system.

Without getting too technical, the term "Turing completeness" refers to a machine's capacity to do challenging calculations. The theory's creator, Alan Turing, claimed that a Turing complete computer is one that, given enough time, memory, and the right instructions, is capable of doing any task, regardless of its complexity.

Bitcoin was purposefully written in a language that is Turing incomplete. Why? because it maintains Bitcoin's simplicity in operation. Additionally, as every programmer is aware, complexity increases present additional risks and issues. Ethereum employs a programming language that is Turing-complete, making it flexible for usage in many contexts. Because of this, programmers have been able to configure the Ethereum blockchain to do a variety of tasks, including managing smart contracts. Low base layer throughput is another issue with Bitcoin development. Bitcoin utilizes a proof-of-work (PoW) consensus process, which limits the number of transactions that may occur on the blockchain yet ensures security, decentralization, and immutability.

Can You Build on The Blockchain for Bitcoin? You can, indeed. Bitcoin's foundation layer won't alter to enable the creation of sophisticated apps until a significant adjustment is made. We may anticipate this to be the situation for a while given the Bitcoin community's cautious attitude toward improvements. Instead, scaling solutions that attempt to increase the system's functionality and scalability can be used to build on the Bitcoin network. Scaling solutions, often known as Layer 2 technologies, abstract some functions from the base layer but rely on it for security and immutability. The most well-liked method for scaling Bitcoin-based apps is Lightning Network. Small transactions don't necessarily need to be recorded on the blockchain, which is the main tenet of the Lightning Network's architecture. By enabling off-chain transactions, Lightning increases system throughput. To guarantee security and immutability, the ultimate status of these transactions is nonetheless documented on the blockchain.

There are various uses for the Lightning Network, particularly when developing apps. Micropayment systems like Tipping.me, a browser plugin that enables users to tip people on Twitter, are examples of apps created with Lightning Network. The multiplayer battle royale game LightNite, which is akin to Fortnite, is another well-known Lightning Network application. However, LightNite is a play-to-earn game that gives players bitcoin incentives based on how well they perform. Strike, Sphinx, Bitrefill, and LN.Pizza are a few other Bitcoin-based programs that utilize the Lightning Network.

A Layer 2 approach for creating smart contracts that can function on Bitcoin is called Rootstock (RSK). A two-way peg links the RSK blockchain to the Bitcoin blockchain. Those who are familiar with sidechains will be able to comprehend how Rootstock communicates with Bitcoin. The Rootstock Virtual Machine (RVM), which enables the execution of smart contracts, is comparable to the Ethereum Virtual Machine. Importantly, Rootstock's VM is Turing complete, allowing programmers to include sophisticated logic into applications similarly to how they do with Ethereum. The security of Bitcoin may be accessed by Rootstock thanks to merge mining. Through the use of off-chain solutions, it can also encourage quicker transactions. The Rootstock blockchain may be able to process up to 100 transactions per second, which is significantly more than the rate at which Bitcoin now processes transactions.

It turns out that there are a lot of benefits to thinking about running applications on the Bitcoin network. You should first think about how Bitcoin affects the network. The phrase "network effects" in economics describes a situation in which a product's value increases as its customer base expands. Bitcoin has the largest market value of any cryptocurrency on the market and is the most widely used blockchain. Building services for Bitcoin users makes financial sense given that popularity of the cryptocurrency is predicted to increase exponentially in the coming years. To connect with smart contracts and DApps on other platforms, the majority of holders have opted to exchange their bitcoin for other cryptocurrencies. By enabling the usage of DApps, NFTs, DeFi markets, and smart contracts on the Bitcoin blockchain, developers may easily get into this sizable market.

The security that Bitcoin offers consumers is a crucial additional justification for running DApps on it. Though viewed as cumbersome and computationally expensive, Bitcoin's proof-of-work consensus process is unquestionably the most difficult to exploit. Hackers would need to hold 51% of the network's nodes in order to gain control of the Bitcoin blockchain. Even while it's not completely impossible, the exploit would need a lot of time and money to be successful. And since there aren't many hackers willing to invest that much money, we can rule out the likelihood of a Bitcoin breach.