The Dfinity Foundation, a non-profit organization that develops the Internet Computer protocol, has launched a “twin” token that is cryptographically secured 1:1 by Bitcoin. Known as “ckBTC,” the new token is being promoted as a liquid and cost-efficient solution that will enable layer-2 capabilities on Bitcoin while maintaining security. The goal is to offer a secure solution to Bitcoin’s scaling concerns by integrating directly with the network at the protocol level. This would also eliminate the reliance on centralized bridging services.
Bringing Layer-2 Capabilities to Bitcoin
The latest integration allows Bitcoin transactions to be executed 100% on-chain, making it easier to incorporate Bitcoin into decentralized finance (DeFi) as well as Web3 services. The end goal of ckBTC is to deliver a “secure and seamless” transaction with lower fees than Bitcoin. However, ckBTC is not like existing wrapped tokens, which are controlled by a centralized entity.
ckBTC uses “canisters,” which can also be denoted as “smart contracts for asset transfers,” to eliminate the need for intermediaries or risky cross-chain bridges. The developers plan to integrate ckBTC with various decentralized applications (dApps) on the network, such as Infinity Swap and ICLighthouse, enabling users to use BTC as collateral in loans and even stake it.
A community governance proposal for ckBTC was rolled out on March 30th for an upgrade that sought to enable the Know Your Transaction (KYT) integration in the ckBTC minter. This would subsequently pave the way for the seamless conversion of BTC into ckBTC by users. Over 99% of voters have approved the proposal.