This Lightning Network Designer Is Re-Inventing Bitcoin Smart Contracts

Bitcoin is usually not considered the blockchain best suited for self-executing conditional payments, better known as smart contracts. While it does support basic programmability to enable features like time locks and multi-signature (multisig) schemes, competing projects like Ethereum, Ethereum Classic or Qtum are often expected to better support more advanced applications.

However, a new wave of research is increasingly questioning this assumption. For example, Scriptless Scripts, a project spearheaded byBlockstream mathematician Andrew Poelstra, cleverly utilizes the magic of cryptography to move smart contracts off-chain, while leveraging Bitcoin’s security, but without requiring extensive smart-contract support on the Bitcoin protocol itself.

Along similar conceptual lines, Discreet Log Contracts (DLCs) could deploy another class of smart contracts on top of Bitcoin. A project by one of the authors of the original Lightning Network white paper, Tadge Dryja, and recently presented at Scaling Bitcoin Stanford, DLCs could realize blockchain-enforced insurance companies, futures contracts, dollar-pegged coins and much more.

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