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A year after Taproot, the Bitcoin community is unlocking DeFi’s potential

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Taproot support across the industry is still creeping up One year after the bitcoin soft forkindicating strong potential for innovation and broader adoption of Web3 solutions that will be unlocked by the world’s largest cryptocurrency, the sources told Cointelegraph.

“From the outset, Satoshi predicted that the layers being built on top of the Bitcoin blockchain would enable Bitcoin to go beyond being pure money just by adding programmability, making Bitcoin the perfect framework for building Web3 capabilities,” noted Alex Miller, CEO of Web3 Developer Platform. Hiro.

The Taproot upgrade in November 2021 and lay the foundation for accelerating decentralized financial services through Bitcoin (BTC) network. Allows more efficient verification of multi-signature scripts, addresses privacy issues, and improves block storage by reducing the volume of complex transactions that occur on the network.

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The changes have been long overdue in the industry, as many Bitcoin holders are not using their coins Decentralized Finance (DeFi) Dominic Williams, Founder and Chief Scientist at DFINITY, the organization behind the Internet computer blockchain, is one of the companies working to unlock Bitcoin’s potential for DeFi.

Internet Computer announced on December 5 that it has integrated the mainnet with the Bitcoin network, serving as Layer 2 where smart contracts can hold, send, and receive BTC locally without the need for third parties or blockchain bridges, which were one of the hackers’ targets. In 2022 when billions of dollars have been drained. According to the company, almost every DeFi application built on the Internet’s PC blockchain plans to integrate Bitcoin because of the liquidity it provides.

Related: The future of enterprise smart contract adoption

During smart contract Bitcoin functionality Users wishing to participate in DeFi can send their coins to a Bitcoin smart contract address, and withdraw coins directly from their wallets. Soon you’ll be able to send a simple chat message, like “Happy Birthday!” Here’s 100,000 satoshi! “Using a full-chain Web3 service like Open Chat,” Williams noted.

Web3 enabled blockchain bitcoin It also means more trust in cryptocurrencies and DeFi apps, Alex Miller stated:

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“Recent internal meltdowns at centralized entities like FTX will continue to drive interest in truly decentralized finance — where transactions are secured algorithmically at the consensus level and users don’t have to trust third party custodians to ‘do the right things’ with their coins. Given its pioneering history in decentralized trust Bitcoin is the most logical place for people to conduct DeFi transactions.”

Decentralized autonomous organizations (DAOs) could also benefit from the smart contract functionality of bitcoin, according to Miller, but DeFi is likely to account for most of the growth. “People want to know that the blockchain they invest time and money in will be around in a couple of years, Bitcoin has a great track record here. In bear markets, developers and investors alike are looking for safer assets to focus on, and Bitcoin will always have a unique advantage here.” To 2023, I believe DeFi will be the biggest growth point in our ecosystem.”

For nearly 14 years, Bitcoin has seen several hard and soft forks led by the crypto community. Upcoming upgrades may include covenants, which are described in Bitcoin Improvement Proposal (BIP) 119 and will be credited to the list of addresses where a user can send their funds.