Bitcoin <> ICP
The Internet Computer (ICP) cryptographically integrates with the Bitcoin network, enabling a plethora of native bitcoin smart contract use cases — all without the need for bridges.
Think DEXs offering BTC trading pairs, decentralized fundraisers accepting Bitcoin, or Web3 SocialFi services allowing satoshis to be sent via chat messages!
The Internet Computer (ICP) is integrated with the Bitcoin network at the protocol level. The canister smart contracts it hosts can create Bitcoin addresses as well as send and receive bitcoin directly on the Bitcoin network. This means bitcoin can be easily and securely incorporated into DeFi and Web3 services on the Internet Computer blockchain, without having to trust wrapped bitcoin from centralized bridging services, which are at high risk of being taken down or hacked. Between 2021 and 2022, more than 2 billion dollars was stolen by exploiting unsecure blockchain bridges.
The ICP x BTC integration comprises two key building blocks (and APIs): Network integration & chain-key ECDSA
Combining these building blocks, canisters can directly and securely hold, receive, and send bitcoin seamlessly as if the Internet Computer and the Bitcoin network were one blockchain. Another way of looking at it, is that the Bitcoin integration is the same as running a Bitcoin node on chain.
One key tech development allowing smart contracts on the Internet Computer to obtain the balances of Bitcoin addresses as well as directly send and receive bitcoin is inter-chain communication. As the ICP blockchain creates transactions for the Bitcoin blockchain, its nodes directly transmit the transaction to the nodes of the Bitcoin network, without any need for intermediaries that might censor them. ICP nodes also directly pull blocks from the Bitcoin network to maintain Bitcoin's current UTXO set, allowing canisters to query the balance of Bitcoin addresses and their UTXOs. Creating bitcoin transactions and querying UTXO sets are made available to canisters by the Bitcoin API.
The real innovation behind Bitcoin integration is chain-key ECDSA signing — advanced threshold cryptography integrated with ICP. In short, chain-key ECDSA is a set of cryptographic protocols that allow Internet Computer nodes to cooperatively create ECDSA signatures, which can be used to sign bitcoin transactions, using a highly fault-tolerant, decentralized network that is resilient to attacks by malicious nodes. The secret key is never stored in one place, instead it is broken down into key shares held by ICP nodes that are re-shared periodically. When requested, nodes use their key shares to collectively sign BTC transactions without recreating the original secret key. This signing protocol assumes a threshold of nodes to be honest.
Chain-key Bitcoin (ckBTC) can be sent with 1-2 second finality and negligible fees — a multi-chain bitcoin twin, trustlessly created by chain-key cryptography and a pair of canister smart contracts that directly hold raw bitcoin without relying on intermediaries.
In 2021, El Salvador became the first country in the world to use Bitcoin as legal tender. However, as bitcoin transactions are slow and have high fees, they are not practical for daily economic activities such as buying groceries or getting a coffee.
The Bitcoin network integration on the Internet Computer is extremely powerful in terms of security and interoperability, but every bitcoin transaction still suffers the same low throughput, high latency, and high fees native to the Bitcoin network. Recent surge in popularity of Bitcoin Ordinals and BRC-20 tokens resulted in Bitcoin's network to be highly congested. This pushed transaction fees above $30, rendering casual every-day transactions completely impractical.
Chain-key Bitcoin (ckBTC), a multi-chain bitcoin twin on ICP introduces layer 2 functionality fuelled by ICP properties like speed, scalability and low transaction fees to bitcoin. ckBTC helps reduce the load on the Bitcoin network, while making every-day bitcoin transactions feasible, which realizes a key part of Satoshi's original vision.
ckBTC implements ICRC-1, the fungible token standard on the Internet Computer, and can be integrated easily by any Web3 service running on ICP.
Use your bitcoin
ICDex by ICLighthouse is the world's first 100% on-chain order-book-based decentralized exchange (DEX) running on the Internet Computer. Using ICP's native Bitcoin integration, you can already buy ICP using your BTC. ICDex also supports ICRC-1, which allows users to trade SNS tokens.
Funded is an alternative to Kickstarter and other traditional crowdfunding platforms. Running 100% on the Internet Computer, it uses NFTs to provide ‘proof of ownership’ in the projects you help crowdfund. Plus, you can now fund the projects you love in ICP and BTC.
DSCVR is an end-to-end decentralized Web3 social media platform that allows communities to form into groups called Portals. These Portals can be NFT gated, airdrop fungible and non-fungible tokens to their members and much more. DSCVR also allows for tipping posts in a growing number of cryptos, including ckBTC.
What if you could own a piece of WhatsApp and vote on what features get added? OpenChat is a fully decentralized real-time messaging service that is indistinguishable from Web2 chat apps, while living 100% on the blockchain. This allows people to send crypto to their friends - including Bitcoin with TX fees at only $0.0029 and OpenChat's own governance token, CHAT.
Watch & Learn
From concept to coding — learn all about the Bitcoin Integration feature on ICP through these videos.Explore more videos