Understanding Bitcoin DApps
Bitcoin DApps, or decentralized applications, run on blockchains powered by Bitcoin while leveraging the core features of the Bitcoin network.
These DApps typically deploy their smart contracts on scaling solutions, sidechains, or blockchains that operate alongside Bitcoin’s main net.
Although Ethereum and other Layer 1 blockchains have been the preferred platforms for building DApps, minting non-fungible tokens (NFTs), and hosting decentralized finance (DeFi) products and protocols, Bitcoin’s influence inspired their creation.
Ethereum, in particular, gained popularity due to its expressive smart contract functionality.
However, Ethereum has faced transaction throughput and cost challenges, leading to a demand for alternative options and separating the money from the smart contract layer.
Enhancing Bitcoin’s Utility with Layer 2 Solutions
Developers have proposed various solutions to increase Bitcoin’s utility in apps and smart contracts without compromising its security.
The Taproot merge was one step toward additional functionality for Bitcoin, but it’s not the optimal solution to run smart contracts directly on Bitcoin’s core protocol layer.
Layer 2 scaling solutions like the Lightning Network, and smart contract layers like Stacks now enable developers to leverage Bitcoin’s privacy, security, and liquidity to run a wide range of smart contracts.
Uniting Stability and Functionality
Decentralized applications deployed for the Bitcoin blockchain using these layer-1, layer-2, and sidechain solutions or separate programming layers are collectively known as Bitcoin DApps.
These DApps combine the stability, security, and economic properties of the Bitcoin network with the functionalities provided by the respective scaling solutions or programming layers.