10 Nov 2020
“We can win a major battle… and gain a new territory of freedom”
We haven’t even scratched the surface of what Bitcoin has to offer.
When an ancient warrior would craft a spear, it was not the spear that he was after. The spear is merely a tool in service of the true goal: victory.
When warrior Satoshi built Bitcoin, it was not digital gold, a store of value, or a payment system that he was after. Satoshi wanted us to win a battle for freedom. Bitcoin, as a SoV and means of payment, was the tip of the spear with which he could realize his true goal: a victory for freedom.
Bitcoin is now on the verge of a massive evolution. We are about to enter a new era in the Bitcoin age, in which Bitcoin mutates beyond mere money, into the engine for an entirely new economy. This economy, a massive new territory for freedom, will be powered by Bitcoin Smart Contracts.
Bitcoin Smart Contracts will Realize the Full Potential of Bitcoin.
Every free act of commerce entails an agreement between the trading parties. Today, agreements, in the form of contracts, are enforced by governments and their court systems. A smarter way to enforce these agreements is to embed them in uncensorable, unchangeable and permissionless code. In other words, to replace the courts with cryptography and consensus.
In a way, every Bitcoin transaction is a mini smart contract. You, the holder of the Bitcoin key, have the sole right to initiate a transaction and this right is enforced by PoW consensus. This idea can be expanded to all sorts of economic transactions, not just payments. Everything from trading, to lending, to incorporating an organization can be enforced by the objectivity of cryptographic code rather than the subjectivity of law makers and their courts.
Imagine building an entire alternative economy as free as Bitcoin itself. This is what Bitcoin Smart Contracts allow us to do. In the near term, smart contracts would allow for permissionless and decentralized trading, lending, leveraging, and borrowing of BTC without trusting centralized exchanges. Through smart contracts, we can build applications that minimize or eliminate trust in any middleman while we trade Bitcoin. It has been ten years and we have made little advancement in decentralized finance built around Bitcoin.
Building Bitcoin Smart Contracts
Bitcoin has a long history of attempts at smart contracts. Until now, the most important attempt was through colored coins. The most successful of these attempts was Mastercoin, later rebranded to Omni. Omni’s greatest claim to fame is as the initial protocol that was used to issue Tether (USDT) tokens.
Today a new generation of Bitcoin Smart Contract technologies is becoming available. An updated proposal for colored coins, this time using lightning channels is RGB. A second development that also runs on Lightening are Discrete Log Contracts (DLC). Both of these technologies are in their infancy but are very promising.
Bitcoin sidechains and layer-2 are a slow but substantial investment in the future. While the hare is racing, the tortoise is building rockets to the moon.— Yago (@EdanYago) October 12, 2020
Bitcoin should only ever be intended to do one thing, and that is serve as permissionless, decentralized peer-to-peer money. It is not Bitcoin’s job to build financial products around it. It is ours. We must learn from what the DeFi community is doing and brandish its greatest innovations as new augmentations for Bitcoin.
There is a third system that is much further along. Indeed, it already has feature-rich and highly functional systems built and in use. This technology is the RSK Bitcoin sidechain. The RSK blockchain is a layer 2 Bitcoin sidechain that is EVM compatible and validated by 40% of the hashpower from Bitcoin miners. RSK is a Bitcoin-native blockchain ecosystem that provides all the smart contract functionality of the Ethereum network. So what is the potential of RSK and what has been built on it?
Sovryn: How it Works and What it does
Sovryn is a decentralized trading platform that allows you to margin trade in Bitcoin, and earn interest by lending it. The dApp is permissionless, censorship-resistant, and has no centralized control. By using the RSK blockchain, users are able to enable more advanced trading features for Bitcoin without trusting a centralized exchange or another blockchain. All you need to use it are a configured Web3 wallet, and some Bitcoin mounted on layer 2 to get started.
2020 is a pivotal year for Bitcoin, with government scrutiny and massive hacks pointing to the need for DeFi to be as decentralized as Bitcoin. Bitcoin is reaching record highs at this moment, and those who are perfectly committed to HODLing Bitcoin are eager for ways to earn on Bitcoin without sacrificing security. Sovryn is the answer.