Bitcoin DApps refer to decentralized applications that operate on blockchains powered by Bitcoin. These applications leverage the fundamental capabilities of the Bitcoin network.
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What Are Bitcoin DApps?
Decentralized applications (DApps) running on Bitcoin-powered blockchains while benefiting from the core features of the Bitcoin network are known as Bitcoin DApps. They generally deploy their smart contracts on scaling solutions, sidechains and blockchains that work in parallel with Bitcoin’s mainnet.
Bitcoin inspired the creation of Ethereum, and since then, Ethereum and other L1s have been the preferred platforms for building decentralized applications (DApps), minting non-fungible tokens (NFTs), and hosting decentralized finance (DeFi) products and protocols. Since the Ethereum network supports expressive smart contract functionality, builders historically flocked to it. However, Ethereum’s growing problems related to transaction throughput and costs have accelerated the demand for alternative options and separation of the money layer vs. smart contract layer.
There is a potential to turn Bitcoin into a productive asset by increasing its utility in apps and smart contracts. Developers have carefully proposed new solutions to add new functionalities to the network without compromising its security. The Taproot merge was one small step toward additional functionality for Bitcoin. Many options have emerged, including layer-2 scaling solutions, sidechains and smart contract layers. These solutions enabled the Bitcoin community to expand into DeFi, NFTs and other emerging sectors.
Early experiments have proven that running smart contracts on Bitcoin’s core protocol layer isn’t the optimal solution for Bitcoiners or developers alike, given you don’t want to spam the Bitcoin blockchain with excessive transactions. With layer-2 solutions like Lightning Network, sidechains like RSK (Rootstock Network), and smart contract layers like Stacks, developers can now leverage the Bitcoin network’s privacy, security and liquidity to run a wide variety of smart contracts. For instance, RSK features a smart contract solution with merged-mining security. It is fully compatible with Ethereum Virtual Machine (EVM), thus allowing developers to seamlessly migrate their existing Solidity smart contracts to the Bitcoin ecosystem without many changes.
On the other hand, Stacks’ layer-1 solution connects with Bitcoin’s main chain through its Proof of Transfer (PoX) consensus mechanism. As a result, it enables developers to deploy smart contracts and Dapps for the Bitcoin network and take advantage of Bitcoin’s stability, security and economy, while at the same time contributing to BTC miner earnings through transaction fees natively in the BTC network.
Decentralized applications deployed for the Bitcoin blockchain using any of these existing layer-1, layer-2 and sidechain solutions or separate programming layers are collectively known as Bitcoin Dapps.
Muneeb Ali is the CEO of Trust Machines, a startup that recently raised $150M to build the largest ecosystem of Bitcoin applications. He is the co-founder of Stacks, a decentralized programming layer for Bitcoin. Muneeb received his Ph.D. in Computer Science from Princeton University. His Ph.D. thesis was nominated for the ACM SIGCOMM dissertation award by Princeton University. Muneeb gives guest lectures on Bitcoin & crypto at Princeton, and his research publications have over 1,500 citations. He is one of the main characters in George Gilder’s book Life After Google and was a technical advisor to the HBO show Silicon Valley.
Connect with Muneeb on Twitter.