DLC, smarts contracts on Bitcoin

  • Introduction
  • What is DLC?
  • How do DLCs work?

1. Introduction

One of the biggest criticisms made by those who participate in platforms other than Bitcoin, is the limited programming capacity that there is in this network. That’s why the idea of DLCs (Discrete Registration Contracts) brings great expectations. This technology will expand the capacity of programming transactions in Bitcoin. That is, the ability to create better scripts and smart contracts on Bitcoin.

Read on to learn more about DLCs and how they can improve Bitcoin. You’ll also understand why the developers continue to bet on the capabilities and potential of this crypto currency.

2. What is DLC?

A Smart Contract is a software or decentralized digital program that is created with the purpose of registering the agreements and terms that are established between two or more people. Its main characteristics are that the program monitors that these agreements are automatically fulfilled once the conditions of the same are met. And the best thing is that it does it in a completely decentralized way without the intervention of a third party. A simply great idea, although with several years on top. In 1995, Nick Szabo was already talking to us about it, as the creator of the concept.

However, the idea was at that time impractical, until Bitcoin came along, and the blockchain technology. Bitcoin was the first crypto currency to run smart contracts (Bitcoin scripts are just that), although in a rather limited way. However, the arrival of Ethereum changed everything. This platform took the concept of smart contracts to a new level, and nowadays, nobody doubts that.

But what happened with Bitcoin? Well, for many years, Bitcoin didn’t modify its Bitcoin Script to make more complex smart contracts. However, times are changing and developers now aim to add better functionality in that sense. That’s where DLCs, or Discrete Registration Contracts, come in.

Simply put, a DLC is a smart contract that is implemented over the Bitcoin network. These can be used to record agreements and terms that will be fulfilled upon the occurrence of a future event. This is where the novelty comes from, because Bitcoin has kept a low profile so far regarding the use of intelligent contracts. A fact related to the simplicity of its code for implementing scripts (Bitcoin Script).

In many media outlets you can read the recent 1 Bitcoin bet between Chris Stewart and Nicolas Dorier about who will win the presidential election, Trump or Biden, registering the agreements of this bet by using a DLC in the Bitcoin main network.

Although the bet is quite curious, the novelty of this event is the demonstration that the developers make to implement smart contracts on the Bitcoin blockchain. This fact leaves evidence of the potential of the main crypto-currency platform in the world.

Bitcoin enthusiasts welcome the wide horizon of opportunities that are opening up with Bitcoin’s advances in this path, and it foretells the advent of an era of great new features that will enhance the capabilities of the Bitcoin Network in this field.

3. How do DLCs work?

The operation of a DLC begins when two people interested in establishing the DLC contract, set its terms and agreements that will be executed by the contract. From there, the contract waits for its activation according to the scheduled events. These events and their monitoring are controlled by a series of oracles.

Once the details of the contract are agreed upon, the persons involved in this contract send the funds to a multi-signature address. With the deposit made, the oracle signs the contract with the hash that points to the person or persons who benefit from the contract. This hash will allow the beneficiary or beneficiaries to withdraw the funds from the contract.

However, all the details of the contract are registered in one address of the Bitcoin blockchain. At this point, it happens just as it does in Ethereum, giving us the assurance that the contract is unchangeable. These contracts are issued as a standard multi-signature transaction, which gives discretion to this type of intelligent contract. This is possible because DLC obfuscates the smart contract in such a way that it is not possible to know whether it is a normal transaction or a smart contract.

Developers announced a major update to Wasabi’s bitcoin wallet

zkSNACKs has announced a new version (2.0) of its Wasabi bitcoin wallet with a new user interface and implementation of a protocol for CoinJoin transactions called WabiSabi.

According to zkSNACKs, in Wasabi 2.0 „manual CoinJoin setup will be a thing of the past or will only be available to experienced users“ and the entire coin mixing process will be automated.

„Wasabi 2.0 is a next-generation wallet for privacy on the bitcoin network. This wallet will finally make privacy available to any bitcoin user, not just to technically savvy people,“ the developers say.

The WabiSabi protocol, according to zkSNACKs, will provide faster transactions and lay the foundation for payments to CoinJoin.

CoinJoin in the current version of Wasabi Wallet requires participants to deposit a certain number of bitcoins to mix coins; with WabiSabi users can deposit any amount they want (more details: the Wasabi Wallet team is working on a protocol that will allow mixing different bitcoin amounts).

According to developers‘ estimates, the wallet release will take place ‚at best‘ in 3 months (95% probability of missing). „The ‚most likely scenario‘ assumes a release in 9 months (pass probability 50%) and the ‚worst scenario‘ assumes a release in 14 months (pass probability 5%).

Expert: Crypto regulation will continue to increase

The increased regulation of the crypto industry recently could become normal in the future.

In the past few years, supervisory authorities around the world have increasingly targeted the crypto industry, creating a little more clarity in gray areas and punishing crossings

Although crypto currencies are being increasingly regulated, the attitude of the regulatory authorities towards them has hardly changed, at least that is what Alex Wearn, CEO and co-founder of the IDEX crypto exchange, thinks.

“The regulation of cryptocurrencies itself has not really changed in the past few years,” as Wearn accordingly stated to Cointelegraph. In this regard, he adds: „Rather, law enforcement has increased in this area, which helps companies and entrepreneurs to understand what they are allowed to do and what not.“

The crypto industry, which has long been viewed as a kind of “Wild West”, has matured in recent years. During the big hype of 2017, the crypto markets went through a period of excessive speculation that reached a questionable climax with Initial Coin Offerings (ICO), a method of raising capital for crypto companies. Reason enough for the supervisory authorities to pay more attention to the industry.

In the meantime, the headlines about crypto regulation are almost daily, because government interventions are increasing recently

A prominent example of the past few weeks is that the US Department of Justice and the regulator for derivatives trading (CFTC) have brought charges against the large crypto trading platform BitMEX. Aside from law enforcement, the US authorities also clarified some time ago regarding the custody of crypto currencies by banks. In addition, many governments are now trying to launch their own central bank digital currency (CBDC) in order to get involved themselves if possible.

„Crypto regulation is still in its infancy, but in the last year we have seen great strides in the form of crypto taxation and central bank digital currencies,“ said Sasha Ivanov, CEO and founder of the blockchain platform Waves, the latest developments assesses. And further:

“Regulation will be an important issue for the crypto industry next year. It is only a matter of time before more and more regions have to comply with their regulatory requirements. But the right kind of regulation is a good thing for the industry. Waves wants to be at the forefront of the emerging dialogue and help shape future regulation of the crypto industry. “

The governments and authorities of several countries have in recent weeks plans and specifications for the regulation of crypto currencies presented .

Former Google attorney is the next senior lawyer in the crypto industry

Coinbase is hiring another top lawyer and is possibly preparing an IPO.

Coinbase crypto exchange announced on Friday that it had appointed Milana McCullagh, a former senior lawyer at Google, as its new assistant legal counsel for products and commerce

McCullagh, who was with Google for 13 years, is supposed to take on a number of legal tasks at Coinbase with regard to the product range of the crypto exchange, and to help this overall to optimize its compliance for new products.

The appointment of McCullagh is on the one hand another chapter in the wave of lawyers hiring from Crypto Bank and on the other hand it underscores the trend that more and more crypto companies are bringing high-ranking lawyers into their own ranks.

Between August and October, Coinbase hired Katherine Minarik, the former senior lawyer at Dyson Ltd., as the new assistant litigation director, Carly Nuzbach Lowery, a former senior lawyer at Uber Technologies London, as co-lead legal affairs, Jade Clemons, hired a former lawyer from Fenwick as commercial legal advisor; and Janice Payne, former director of internal legal affairs at CLS Group Holdings AG, as the new director of compliance.

The wave of hiring from Coinbase is intended to bring legal expertise to the company and at the same time to dispel concerns about the legal compliance of the crypto exchange, which is all the more important in the run-up to a possible IPO.

The San Francisco-based crypto company had already spoken to investment banks and law firms about the possibility of an IPO earlier this year

An interesting footnote to the efforts of Coinbase is that the crypto exchange last on knocking , has their workforce in „political neutrality“ exercises. Accordingly, political discussions and expressions of opinion should no longer take place in the work environment, which has led almost 60 employees to leave the company.