Ever since bitcoin started it's chain the transaction fees were the concern. Each year it continued to increase. And then later some of the developers came up with the layer 2 solutions in order to reduce the fees on the chain. And so far it has worked to some extent.
There is a blockchain named "Internet computer". This chain has designed a protocol named "chain key bitcoin". It is basically a protocol that runs on the node of the internet computer ICP node. And it would reduce the need for the bitcoin bridges and the marketplaces.
Let's discuss how the chain-key bitcoin (ckBTC) and how the protocol works for reducing the bitcoin fees and how it sends the assets.
How ckBTC Works? How the bitcoins are transfered faster?
Chain-key BTC also known as the ckBTC works by initiating the transfer of the bitcoin and the internally ckBTC tokens are moved between the nodes and then same bitcoin is taken out of another node where the bitcoin are meant to reach. Here due to the transfer of the ckBTC tokens the transfer is faster and also lower cost as well.
As it is native bitcoin integration, you'd be finding it as a low fee. I have noticed that there are some of the dApps making use of the native bitcoin integration. The same has been used by the internet computer blockchain. And it is something you may find different with the transfer of the assets as it is happening on the ICP chain. You can read more about the functionality here.
What are the benefits of the ckBTC?
Let's take a look at some of the benefits of the ckBTC and how ICP benefits from making use of the ckBTC token. So here are some of the benefits that you would notice about the ckBTC. It does not require one or more open or close channels. There is no need for the liquidity hub or the route. Currently the token ckBTC is swappable to other BTC assets too.
There is an option to offer the ckBTC to be kept for the borrow and get interest on it if kept for loan too. There are not need for the keys to be kept and it's easier to use as a wallet too. Considering it is on the layer 2 of the blockchain you would notice than the smart contract applications are possible to be built. So like lightning network here you would have less fees to be on the transfer as well.
What's the difference between Lightning Network and ckBTC?
Lightning network is layer 2 protocol on the bitcoin. It requires the peer to peer node for the validation and verification of the transfers of the SATS on the chain. Lightning network is cheap and also the faster network transfers compared to the main chain.In case of the wallet there are specific lightning network protocol based wallets to scan or use the lightning URL to transfer the funds.
In case of the ckBTC, you would be making the transactions on the ICP chain. Which is developed by the internet computer blockchain. And the chain has the token called ckBTC which transfer and gives out the bitcoin at the end node. So it is different from the lightning protocol and also the price is cheaper and faster. Here the faster settlement is much faster than lightning as in 1 or 2 seconds. Which goes to show the potential of the ckBTC.
Just like lightning network we have noticed that chain-key Bitcoin (ckBTC) is a good protocol for transfering the funds on the layer 2 of the chain. Considering it's a faster transfer of the bitcoins let's see what's the future of the ckBTC on the internet computer ICP blockchain.