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Discover the Top 10 Bitcoin Protocols for Financial Empowerment

The first cryptocurrency, Bitcoin, designed by Satoshi Nakamoto in 2008, not only challenged conventional financial systems and institutions but also encouraged lateral thinking and promoted the creation of new projects and various technologies. These protocols add more potential uses of Bitcoin than just a payment method, thereby giving users autonomy and control, focusing on different uses of the platform and other decentralized applications.

Based on the idea that ” protocols are the invisible infrastructure that power Bitcoin and the rest of the decentralized finance (DeFi) world,” this article introduces ten groundbreaking Bitcoin protocols that are changing the world. Let’s have a brief discussion about the top 10 Bitcoin protocols.

Lightning Network

The Lightning Network is an application that enables users to transact directly without the need to first use the Bitcoin network. This allows for real-time, almost free cross-user transactions since it forms payment pathways that can clear transactions at a separate layer from the blockchain. Altogether, this protocol greatly increases Bitcoin’s scalability and decreases the cost of individual transactions, making microtransactions possible and thus increasing the possibilities of Bitcoin’s usage for common micropayments.

Liquid Network

Created by Blockstream, the Liquid Network is a Bitcoin sidechain that allows for fast and private transactions between exchanges and businesses. It facilitates the creation and issue of ‘tokens’ such as stablecoins and increases the ‘exchange ratio’ by providing a fast means of moving Bitcoins and other assets between exchanges.

Rootstock (RSK)

RSK, or Rootstock, is a sidechain for smart contracts backed by the Bitcoin blockchain. It helps create decentralized applications (dApps) with Smart Contracts using formal programming languages, like Ethereum. RSK benefits Bitcoin by providing smart contract execution and possible programs and procedures on the Bitcoin chain.

Schnorr/Taproot

Schnorr signatures and Taproot are two anticipated Bitcoin protocol improvements intended to improve security, scalability, and decentralization. About Schnorr signatures In the current blockchain, multiple signatures can be produced from several inputs to make a single signature to help minimize the size of the transaction and enhance privacy. This would improve smart contract features where elaborate scripts appear identical to traditional transactions, which improves privacy and scalability.

Drivechain

Drivechain is an agreed-upon sidechain scaling solution for Bitcoin protocols that proposes a method of having different consensus rules and economic models on different sidechains while keeping Bitcoin as the main security chain. This protocol proposes to improve Bitcoin’s flexibility and capacity in scaling up to the highest levels without sacrificing security and decentralization.

Atomic Swaps

Using atomic swaps, it became possible to swap one cryptocurrency for another directly without obtaining permission from a centralized authority. In Bitcoin-based atomic swaps, Bitcoin is exchanged with some other cryptocurrency directly, which increases liquidity in trading and decentralized trading.

Statechains

Statechains are a layer two scaling solution intended to move ownership off Bitcoin without the occurrence of on-chain transfers. By providing Bitcoin ownership transfer off-chain, Statechains avoid clogging on-chain, cut transaction costs, and enhance scalability without compromising the security features offered by Bitcoin blockchain.

CoinJoin

CoinJoin is a feature that allows the combination of multiple users’ Bitcoin transactions into a single transaction, making the source and destination of the funds hard to track. As it integrates inputs and outputs, CoinJoin lifts the anonymity level and the ability to track transactions, as well as contributes to the creation of Bitcoin as a free-of-value currency.

Miniscript

Miniscript is an addition to the rare Bitcoin script in a form that is friendlier to humans and easier to analyze. One of its advantages is that it makes it very easy to set up literal spending conditions in Bitcoin scripts without compromising soundness and performance. Miniscript makes Bitcoin more practical for application developers; they can create intricate scripts with ease and precision.

Bitcoin Vaults

The enhancement, known as the delay period (time-lock), is essentially an extra layer of security for Bitcoin deposits insofar as it preserves a specified Vault address from which the actual withdrawal of the deposited Bitcoins is possible after the delay period. This protocol adds extra layers of security against theft and unauthorized transactions since users can cancel the withdrawal process within the delay period while improving the liquidity aspects.