Hi,

Most crypto enthusiasts have long figured out that there is an arms-race towards smart contract leadership in 2021. It is a well-known fact that the initial Bitcoin protocol didn't pay any attention to smart contract functionality which is why Ethereum grew so much, integrating smart contract technology. Especially the ERC-20 and ERC-721 Ethereum standards made Ethereum the leading smart contract network today.

Ethereum is followed by Cardano, a 3rd generation blockchain which hopes to prove it can solve Ethereum's shortcomings such as high gas fees, which are holding Ethereum's true potential back significantly, making room for other crypto smart contract players to eat away at Ethereum's market cap. The result is an arms-race of smart contract platforms, which in a best case scenario will all have a place in an interoperable global decentralized financial ecosystem.

However: did you know that Smart Contract can be deployed on Bitcoin?

Bitcoin and Taproot.

Taproot is a Bitcoin Protocol Upgrade Solution allowing developers to attach smart contracts to the Bitcoin blockchain. Taproot also adds an extra layer of privacy to the smart contracts by splitting up the smart contract, making it indistinguishable from normal regular Bitcoin transactions.

Bitcoin upgraded a few months ago through a Bitcoin Improvement Proposal or BIP, allowing the necessary improvements so Taproot can be activated. Three components are at the core of the upgrade: P2SC, MAST and Schnorr signatures.

• Pay-to-ScriptHash (P2SC): Taproot is a technical way of designating scripts a digital signature, allowing the transaction output to be made equal to that of a Pay-to-ScriptHash;
• Merkelized Abstract Syntax Tree (MAST): A MAST breaks down every transaction property before transforming it into its end hash, allowing room to leave details out to improve privacy, whilst the smart contract becomes a simple digital signature;
• Schnorr Signatures: Schnorr allows multiple signers to produce an aggregated public key which can be signed jointly. This allows for scalability as each public key and each signature no longer need to be stored on the Bitcoin blockchain separately but can be combined into only one transaction.

This upgrade can be compared to the SegWit update and will open up the Bitcoin ecosystem for smart contract functionality. Digital gold will become smart digital gold, :-). It also means that DeFi can migrate to Bitcoin when the upgrade goes live! This is big news and developers will not hesitate to embrace the opportunity.

Conclusion: I foresee that smart contract functionality will be shared among Bitcoin, Ethereum, Cardano and other blockchains, all whilst being interoperable.