Does Bitcoin have smart contracts?
Does Bitcoin have smart contracts?
Bitcoin

Does Bitcoin have smart contracts?

By Marco Cavicchioli - 15 Jul 2020

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The Bitcoin protocol does not natively support the so-called smart contracts

However, additional layers based on the Bitcoin blockchain have been developed, or are in the process of being developed, allowing this functionality to be added to the network. 

The thing is that there is already a decentralized blockchain with native smart contracts, which has been widely used for some time now: Ethereum

For this reason, it is not easy to create a successful alternative based on Bitcoin, due to the fact that the smart contract market is already largely dominated by Ethereum, alongside EOS, TRON and a few other blockchains. 

In addition, not all solutions developed to add smart contracts to Bitcoin are decentralized. The crucial point is in fact decentralization, because not only is it perhaps the main feature of smart contracts, cryptocurrencies and blockchains but primarily because the main competitor, Ethereum, is a decentralized network. 

Therefore, it is difficult that centralized, or poorly decentralized solutions, will succeed on Bitcoin as an alternative to smart contracts on Ethereum, or on EOS and Tron. Moreover, adding this functionality not natively available in a decentralized way on Bitcoin may not be particularly easy. 

One project that is already trying to do this is RGB. This is a decentralized top layer based on Lightning Network and the Bitcoin blockchain, thanks to which it is possible to issue digital assets. The goal would be to offer an alternative to Ethereum’s ERC20 tokens or NFTs. 

For now, the features of RGB, which is still in beta phase, do not completely replace all those of Ethereum, however, the ultimate goal is to build an ecosystem based on the Bitcoin blockchain that allows doing everything that can be done on Ethereum. 

In addition, RGB, being based on Lightning Network, theoretically has already solved the scalability problems that Ethereum has not yet overcome, albeit the launch of Ethereum 2.0 is expected to address them soon. 

Another initiative in this sense is that of developer Jeremy Rubin, collaborator of Bitcoin Core and co-founder of the MIT Bitcoin Project, which is promoting BIP119, the so-called CheckTemplateVerify that provides new types of smart contracts on Bitcoin. 

In particular Rubin, during a RecklessVR meetup dedicated to virtual reality, presented Sapio, a programming language with which to create smart contracts on Bitcoin

So, if on the one hand the dominance of Ethereum, and the Solidity language, seems to be well established, on the other, besides EOS and Tron, Bitcoin is also joining the competition, despite the slower development of smart contract features on this blockchain. 

It is difficult to understand how the market will welcome these new features, but Bitcoin remains the main point of reference in the crypto sector, and this could give it the necessary push to establish itself in the smart contract domain in the long term. 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 11 thousand subscribers.

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