Bitcoin Smart Contract ‘Federation’ to Launch With 25 Startups

Twenty-five bitcoin companies plan to launch smart contract federation to support new applications for the bitcoin blockchain.

AccessTimeIconAug 2, 2016 at 7:06 p.m. UTC
Updated Apr 10, 2024 at 2:45 a.m. UTC
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Bitcoin smart contracts are getting their own cooperative.

Announced today, a group of international bitcoin companies have signed a letter of intent to form a federation that would find them supporting and contributing to the development of a smart contracts platform that would utilize the bitcoin blockchain.

Unveiled today, the RSK Federation is built around the RSK smart contract network created by Buenos Aires-based startup Rootstock.

Rootstock co-founder and CEO Diego Gutiérrez Zaldívar described the federation to CoinDesk as "a huge signal from the bitcoin ecosystem" and a validation of how companies can leverage sidechains, a technology developed by bitcoin startup Blockstream to add functionality to the bitcoin network.

He told CoinDesk:

"The whole extension of bitcoin, and solving some of its biggest challenges with richer scripting, will solve a lot of shortcomings of bitcoin in the coming years while protecting the intrinsic value of bitcoin."

Included among the 25 companies announced today are Hong Kong-based Bitfinex; San Francisco-based BitGo; Dubai-based BitOasis; Atlanta, Georgia-Based BitPay; Luxembourg-based Bitstamp, Shanghai-based BTCC, Toronto-based JAXX; and Palo Alto-based Xapo.

Described by the company as the first Turing-complete platform to run smart contracts secured by the bitcoin network, RSK uses a "hybrid" security model that combines elements of both proof-of-work (popular among fans of bitcoin’s public blockchain) and a private network.

"The federation is going to provide several key elements and services to develop real use cases of smart contracts," Rootstock co-founder Gabriel Kurman told CoinDesk.

Some of the larger companies who signed the agreement will also operate oracles that would validate contracts and provide data to the network.

RSK launched its initial testnet, called Lotus, in May 2016, but is still almost a year away from having an enterprise ready solution available, according to their own timeline.

Member support

To bridge that gap some of the federation partners are getting involved beyond just signing the letter of interest.

The founder of bitcoin wallet provider Xapo, Wences Casares, told CoinDesk he believes that once RSK’s enterprise version is ready it will surpass the abilities of ethereum by providing the same smart contract functionality on top of the more robust bitcoin blockchain.

To help make that happen Casares said Xapo is "doing as much as Rootstock is letting us do". So far, that means signing the letter of interest, offering to provide wallets for the RSK tokens and making available the assistance of multiple employees.

Casares told CoinDesk:

"We are their soldiers in this battle. So we take orders from them."

While all the companies involved can accurately be described as bitcoin companies, not all of them work only with bitcoin. JAXX, for example, makes a wallet designed to work with any cryptocurrency, and BitGo provides security services across blockchains.

More than cryptocurrency

With the timing of the launch following ethereum's struggle to execute a hard fork, the announcement could easily be seen as an opportunistic play to strike at an ostensible competitor.

But Kurman said the timing is coincidental, pointing to multiple companies who plan to join the federation and also offer ethereum services.

"Our target is to enable financial services for the poorest people in the world," he said. "Going out in a rush or profiting from someone else's nightmare is not our way to do things."

In interview with CoinDesk, JAXX CEO and ethereum co-founder Anthony Di Iorio said that building smart contracts on bitcoin would allow for a "more robust" blockchain ecosystem to flourish.

BitGo co-founder and CTO Ben Davenport also confirmed that his company is participating in the federation. "Our decisions for what blockchains to support are largely customer-driven," Davenport said. "But we like the Rootstock team, and the general idea of what they're trying to do."

Kurman concluded:

"The strong message here is that the bitcoin community is aligning behind a single goal. This is the first time in a long time that we’ve seen the whole ecosystem align in this way."

Tumeric is the next version of the testnet, which the company expects to release by the end of September 2016. This will be followed by the launch of its ginger production network during the first quarter of next year.

While the initial letters of interest in the RSK federation have already been signed, Rootstock said the final documentation to recognize the group is expected to be completed by the end of this year.

Disclaimer: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Rootstock.

Ropes image via Shutterstock


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