What is a Smart Contract?
A smart contract is a self-executing agreement with the terms directly written into code, automating and enforcing the execution of contractual clauses without the need for intermediaries. While smart contracts are a foundational concept in blockchain technology, their widespread use is often associated with platforms like Ethereum. However, with the advent of Bitcoin layers and protocols, particularly the Lightning Network, Stacks and Rootstock (RSK), smart contract functionality has extended to the Bitcoin network.
Bitcoin, primarily designed as a peer-to-peer electronic cash system, lacked native support for complex programmable contracts. This limitation led to the development of second-layer solutions like the Lightning Network and Stacks and sidechains like RSK to bring smart contract capabilities to the Bitcoin ecosystem.
These Bitcoin layers serve as testing grounds for the development and deployment of smart contracts, providing a bridge between Bitcoin's robust security and the programmability offered by more flexible blockchain platforms. While Bitcoin layers might not match the complexity of smart contract capabilities on platforms like Ethereum, they play a crucial role in expanding the utility and use cases of the Bitcoin network, accommodating decentralized applications and innovations within its ecosystem. As a result, the Bitcoin Web3 ecosystem has grown substantially, with the blockchain now serving as the settlement layer for Bitcoin DeFi protocols, NFTs and more.