Chain-key Bitcoin price

CKBTC

#89

The key innovations behind ckBTC are the native Bitcoin integration and chain-key ECDSA signing — advanced threshold cryptography integrated with ICP. In short, chain-key ECDSA is a set of cryptographic protocols that allow Internet Computer nodes to cooperatively create ECDSA signatures, which can be used to sign bitcoin transactions, using a highly fault-tolerant, decentralized network that is resilient to attacks by malicious nodes. The secret key is never stored in one place, instead it is broken down into key shares held by ICP nodes that are re-shared periodically. When requested, nodes use their key shares to collectively sign BTC transactions without recreating the original secret key.

This enables a pair of canister smart contracts to trustlessly create ckBTC, a multichain bitcoin twin that can be controlled by smart contracts and sent with near instant finality for negligible fees — all without the need for bridges or centralized custodians.

This is important, because blockchain bridges are centralized, insecure, cumbersome and costly. The insecurity alone is a dealbreaker: between 2021-2022, more than 2 billion dollars was stolen by exploiting blockchain bridges.

The recent incident where the FTX exchange acted as the custodian, and Sollet the bridge for wrapping and unwrapping BTC and ETH on Solana, demonstrates how bridges and intermediaries can act as single points of failures and are highly vulnerable to hacks. Ethereum smart contracts behind a bridge make asset transfers between blockchains possible, but users must still trust a third-party centralized custodian to manage the digital assets whose code is often not publicly verifiable.

The Lightning Network is the most well known Layer-2 for Bitcoin. Like ckBTC, it allows fast and cheap transfers of BTC value off the Bitcoin blockchain.

Unlike Lightning, ckBTC does not require peer-to-peer payment channels to be established and funded. This means that your full ckBTC balance can always be transferred — no network liquidity limitations.

Canister smart contracts can programmatically hold and transfer ckBTC, making it possible to develop fully on-chain Layer-2 applications for Bitcoin, which is not possible using the Lightning Network.

Another key difference is that ckBTC transaction fees are fixed, and not dependent on the transaction amount, variable intermediate forwarding, or unexpected channel funding fees.

In the future, ckBTC will be available on other networks like Ethereum – also directly, and without bridges, thanks to chain-key cryptography integrations.

Several security assessments are taken on critical components of the Internet Computer such as ckBTC to ensure robust security. These include TLA+ models to formally verify some guarantees, several internal and external security assessments. In 2023, both Bitcoin integration and ckBTC have undergone an external security audit conducted by Trail of Bits with no severe issues found.

ckBTC security audit