Smart Contracts on Bitcoin
Create bitcoin transactions that include escrow, multi-party signatures, arbitration, automation and more using Bitcoin Script. You can also use Bitcoin Script to create payment protocols such as paid email or pay-per-data video streaming protocols, similar to IMAP or HLS but with payment built in.
Rich Potential Made Accessible
Bitcoin Script is like an assembly language that is rich in potential but difficult to work with. Luckily, a company named sCrypt has created a human readable language that compiles into Bitcoin Script, to save you time in working with Bitcoin Script.
Better Understood as Programmable Money
The term Bitcoin Smart Contracts has become popular, but it is better explained as Programmable Money. You are creating custom lock/unlock conditions that control the flow of Bitcoin. It isn’t replacing courts or governments as the term Smart Contracts implies, but rather is a money that you can program arbitrarily complex spending conditions into.
History of Smart Contracts on Bitcoin
The Original 2009 Bitcoin Protocol included a fully featured procedural language, Bitcoin Script, which gave the ability to create custom transaction types such as escrow transactions, multi-party signatures, third party arbitration, and more. Script also enabled more complex use cases, such paid email or paid video streaming protocols using Bitcoin, similar to IMAP or HLS but with micropayments payments built in.
Unfortunately, Bitcoin Script was misunderstood and disabled in the first years of Bitcoin because early Bitcoin developers couldn’t understand the full vision and removed it for simplicity. However, years later as Bitcoin grew in popularity, developers researching the original source code sought to re-enable these scripting features.
Disagreement among Bitcoin developers caused there to be various factions within Bitcoin and the creation of new blockchains that enabled this scripting idea under the term “smart contracts”. Despite their popularity, these blockchains, such as Ethereum, were engineered in such a way that they can’t scale and have huge transaction fees for basic functions, making the majority of use cases impractical.
With the return of the original Bitcoin protocol in BSV, Bitcoin Script is available once again in a form that can scale. The 2020 Genesis upgrade re-established these capabilities of the scripting language.
Features
Turing Complete
As a Turing complete language, any computationally solvable problem can be tackled using Bitcoin Script. Economics is the only constraint for the cost per byte of executing the function. Whether it’s a simple vending machine, or cellular automata modelling complex particle swarm optimisation, Bitcoin script can evaluate it all.
Low Transaction Fees for Micropayments
With transaction fees at a fraction of a penny, even during peak network demand, Bitcoin enables developers to construct light-weight functions for programmable money that can settle value transfers for a penny or less instantly. This killer feature unlocks the potential of web3 and a value based Internet.
Lawful Contracts
Despite the fallacy of the “code is law” mantra for smart contracts, such computer functions can only be considered contracts if they are enforceable at law. In consideration of that, business and society can use Bitcoin to create enforceable contracts, leveraging the benefits of an immutable timestamp server while adhering to all contract and equity law. These contracts may be in the form of legacy contracts in legal prose notarised with an on chain attestation, or deconstructed into machine parsable formats as in the case of Ricardian Contracts.
Use Cases
Bitcoin’s Turing complete script offers a wide range of potential use cases that can benefit all manner of business operations.
For example, it can be used to calculate complex payment problems such as the travelling salesman problem and network routing, enabling more efficient payment processes and guaranteed execution of conditional payments. Bus companies could put up rewards for the public to develop shorter routes for them which can be automatically paid out when a valid solution is calculated in script.
Additionally, Bitcoin’s Script can facilitate video streaming within a payment protocol, creating a seamless payment and content delivery experience for users. Instead of paying $5 for a movie that you might turn off after a few minutes, customers could only pay for the amount of the movie they watched, updating their payment agreement on a second by second basis.
By leveraging Script for logistics purposes, we can enhance supply chain, warranty, and insurance processes while limiting exposure of customer details during transit. An item could be shipped from Amazon with an invoice that has both the logistics company and the customer as payees, and the logistics company will only be paid when the customer signs for the document with the identity that purchased the item, even though the logistics company may never know that identity itself.
Script can also be used for proof of read receipt, providing a secure and efficient method of tracking the receipt of important information. This would be useful for electronic data interchange, project management and for courts to have a method which assures a party has been served correctly.
Several Projects Utilising Smart Contracts on Bitcoin
There are several projects which depend on smart contract functionality made available on the Bitcoin network. From accounting to consulting and advisory applications, NFT platforms, entertainment, education and applications designed to help individuals learn, Bitcoin hosts a countless number of smart contract-enabled and dependent projects which benefit the team, developers and the user base with secure, automated business processes.
UNISOT ID is a decentralised ID verification platform which uses smart contracts in its network process, while Tokenized has developed an entire software suite which allows the creation of all manner of legacy contracts which are enhanced by the blockchain for automation and accountability. These are only two of a number of applications utilising smart contracts on Bitcoin.
All-in-all, exceptional decentralised application ideas can be created and deployed with equally exceptional implementation on an exceptionally-performing smart contract-powered platform.
Self-Executing Digital Agreements
Smart contracts on Bitcoin are developed and deployed with a clear aim to provide enterprises, institutions, government agencies and individuals with a safe, secure, all-in-one tokenisation solution. It is essential to note that the term “Bitcoin smart contracts” is technically inaccurate as programmable scripts are not necessarily enforceable legal contracts. A more accurate term would be “self-executing digital agreements.”
The Bitcoin blockchain is integrated and powered with smart contract protocol made possible by Bitcoin sCrypt, a programming language which enables blockchain smart contracts to operate within the digital environment.
Interoperability
The Bitcoin blockchain promotes seamless integration and exchange of information between various industries, systems, and platforms. The smart contract functionality enables interoperability by allowing different systems to communicate with each other, eliminating the need for intermediaries or a centralised authority. This interconnectedness, based on the triple entry accounting model, allows for streamlined and efficient operations in various sectors, including finance, supply chain, and healthcare.
Scalability and Utility
Bitcoin is known for its scalability, with the ability to process a large number of transactions simultaneously. The various applications and functions enabled by the blockchain include self-executing digital agreements, payments, and integrity for data interoperability. With its robust infrastructure, BSV can accommodate many use cases and industries, such as Bitcoin mining and Bitcoin dApps – otherwise known as Bitcoin-enabled applications.
Efficiency and Flexibility
The Bitcoin network has the potential to evolve and accommodate new use cases, technologies, and innovations. Its capacity to process transactions quickly and cost-effectively makes it an ideal choice for any enterprise or project looking to tokenise or build on the blockchain. The flexible sCrypt programming language simplifies smart contract creation, reducing development time and costs.
Security and Privacy
BSV ensures robust security measures, infrastructure, and protocols to protect the system from unauthorised access or damage. The network safeguards user data and transaction details while maintaining the transparency and integrity of the blockchain. This ensures trust and confidence in the system, making it suitable for a wide range of applications and industries.
End-to-end
End-to-end communication on BSV ensures fast, secure, and reliable transactions. This model enables seamless data transmission and information exchange between different parties on the network, improving efficiency and reducing the risk of errors or miscommunication.
FAQs
What are Bitcoin Smart Contracts?
Despite the phrase’s common use, Bitcoin smart contracts are ultimately self-executing digital agreements. They are programmed to automatically execute actions required in an agreement or contract without the need for intermediaries.
What are Self-Executing Digital Agreements?
Self-executing digital agreements are programs that automate actions required in an agreement or contract. They are trustless, autonomous, decentralised, and transparent and are typically irreversible and unmodifiable once deployed. These digital agreements streamline processes and reduce the need for human intervention, making them an ideal solution for various applications on the Bitcoin network.
In essence, self-executing digital agreements are similar to scheduled transactions in a traditional bank account interface but offer much more flexibility to cover any conceivable transaction type, including trusts, rent, payroll, royalties, and time-locked transactions
Bitcoin smart contracts, or more accurately, self-executing digital agreements, offer numerous benefits, including interoperability, scalability, efficiency, flexibility, security, and end-to-end communication. These features make them a valuable solution for enterprises, institutions, government agencies, and individuals looking to build on the Bitcoin blockchain.
To learn more about Bitcoin’s evolution, delve into Bitcoin history and discover how Bitcoin smart contracts can help enhance any blockchain-aligned business process!
Bitcoin smart contracts can help enhance any blockchain-aligned business process! Build on Bitcoin today.