Cardano: is the Bitcoin Bridge coming?

So far, people mostly associate DeFi with Ethereum and Solana. But the Cardano-Bitcoin Bridge could change that by enabling DeFi on Bitcoin. Still, the plans are receiving a lot of criticism.

Traditionally, decentralized financial applications (DeFi) have been associated with cryptocurrencies such as Ethereum and Solana. But that may soon change. The proposed Cardano-Bitcoin Bridge, based on the Grail protocol, could be the first step toward DeFi applications supported by Bitcoin. This is described in the Grail April 2024 white paper.

On Oct. 24, Emurgo, the development team behind Cardano, announced that they are developing the bridge in collaboration with the makers of the Grail protocol, Bitcoin OS (BTCOS). Shortly thereafter, well-known Bitcoin influencer Peter McCormack called the Cardano-Bitcoin Bridge a "scam."

Bitcoin OS developers responded:

"We make BTC private and programmable while making trust unnecessary, by using Cardano on the backend. Bitcoin owners who don't want an ADA don't even have to own it. This is not a 'scam' - it's an upgrade for everyone."

Charles Hoskinson, the controversial founder of Cardano and co-founder of Ethereum, had long had plans to bring ADA and Bitcoin together through Decentralized Finance.

Even if the Cardano-Bitcoin Bridge is successfully implemented, it may take some time before Bitcoin-supported DeFi applications are fully developed. In a now-deleted post on X (formerly Twitter) stated Hoskinson that developers must first be trained in Cardano's Aiken programming language in order to build Bitcoin/Cardano apps. However, most DeFi developers are currently only familiar with Solidity. This means that DeFi apps for this bridge must be rewritten from the ground up.

How safe is it?

There are concerns about the security of the bridge. Edan Yago, co-founder of BTC OS, stated that it remains possible to block recordings from the bridge if 100 percent of the controllers cooperate maliciously. "To take over the Grail system, one would have to own 100 percent of the nodes," he explained.

It is not only through the Grail protocol that DeFi applications using the Bitcoin network are being developed. Another option, called "OP_CAT," pursues the same goal. However, this would require a soft fork of the Bitcoin node software, which some Bitcoin nodes oppose.

ADA stock price continues to rise

Meanwhile, ADA has shown explosive price growth,returning to the top 10 cryptocurrencies. Over the past seven days, Cardano's value rose more than 26 percent. Although Bitcoin has broken through its all-time high this year, ADA currently stands at just $0.73 (about EUR 0.67). This is still far from the peak value of USD 3.10 (about EUR 2.83) reached during the bull market in September 2021.