It has been made public this week that US-based MIT has been secretly working on utilizing smart contracts from within the Bitcoin blockchain. Smart contracts are usually associated with other cryptocurrencies such as Ethereum; the first crypto to introduce a working version of the concept to the marketplace. MIT researchers found that the Lightning Network allows BTC to utilize these helpful protocols as well.
The Lightning Network and BTC Smart Contracts
The Lightning Network is an off-chain protocol that allows BTC to tackle its current scalability issues through the integration of personal payment channels. These channels allow for unlimited transactions to occur without bogging down the BTC blockchain. Only once the payment channel has been closed can the transactions be added to the blockchain.
Many in the cryptocommunity consider the Lightning Network as Bitcoins saving grace as the original cryptocurrency lost much of its market share last year when scalability issues caused outrages fees to become the norm for users. While the Lightning Network has seen considerable coverage due to its remarkable capabilities, it appears that this is just the tip of the iceberg in terms of technological advancements.
MIT researchers have been quietly working on the project since 2015 under the schools Digital Currency Initiative which seeks to expand the development of cryptocurrency capabilities in the future. This latest announcement is right in line with this desire as the MIT research program has combined two very important crypto theories to create an automated system that could expand BTC’s use across many sectors in the near future.
Oracles are outside entities that are designed to send data to smart contracts after the fulfillment of preprogrammed protocols. In this particular instance, oracles are being used to send data back to the MIT smart contracts to initiate them upon certain conditions.
For example, an oracle could be programmed as such; if it rains today, send $2 of Satoshis to said address. This could, intern, be used to predefine when a smart contract must be executed. If it rains today, purchase five umbrellas from said address.
MIT researchers, Tadge Drya and Alin S. Dragos have created an oracle that broadcasts the current price of Bitcoin in dollars. This broadcast is open and anyone utilizing the Lightning Network can grab this information and use it in their smart contract programs. This is a huge upgrade to the current BTC network and it could be used to automate certain procedures that were once very time consuming and expensive to implement.
Speaking with Coindesk, Drya explained that oracles could be programmed to reflect any data such as weather, prices, stock value, or even football game scores. The Lightning Network’s off-chain protocol makes it possible to employ an endless amount of oracles without adding congestion to the blockchain.
Potential Use Cases
One of the main areas where this technology can flourish in the coming months is the investment sector. Many third-parties have already expressed interest in this revolutionary tech. This system could allow BTC Futures to utilize smart contract technology. Once the agreed value has been reached, the smart contract can automatically calculate and send profits to all parties involved in the transaction.
Lighting Up the Future
There has been a lot of hype surrounding the Lightning Network and this latest news will only seek to further interests into this intuitive protocol. In the future, you can expect to see this protocol used to employ smart contract technology to further the usability of BTC and all cryptocurrencies that become a part of the ever-growing Lighting Network.
What do you guys think? Are BTC users ready for Smart Contract functionality? Let us know in the comments below.