Joseph Chow, Developer of BTC Relay, highlights how Ethereum and Bitcoin working together are the innovations that make trust between buyer and seller possible.
BTC Relay, an Ethereum contract, allows its users to pay with Bitcoin to use Ethereum as a trust-free way of securely validating a Bitcoin payment. Furthermore, BTC Relay acts as the foundation for the Bitcoin Blockchain, whilst also using the Ethereum smart contracts to allow a range of answers from whether the Bitcoin blockize has increased and to the Bitcoin difficulty.
BTC Relay is known as a “free-trust oracle” that can be used as a random number generator (RNG) in order to ensure more funds are secure. In Bitcoin, new blocks are produced approximately every 10 minutes, so the Bitcoin block headers are sent to BTC Relay for verification.
Joseph Chow, Developer of BTC Relay comments:
“BTC Relay is a building block that Ethereum smart contracts can use to verify Bitcoin transaction. A simple example is an application for a trust-free exchange of BTC and ETH. An ETH seller would put ETH in a contract. The contract’s terms could be to only release the ETH when a BTC payment to a certain BTC address is made. So the ETH buyer pays the BTC and uses BTC Relay to pass along the Bitcoin transaction to the contract.
BTC Relay will only do this if the payment transaction is valid and then the contract can check the transaction sent the correct number of BTC to the correct BTC address, and then pay out the ETH. There is no need for the buyer or seller to trust each other, or trust that an escrow will not steal their funds.”
Along with an increased number of relayers (Bitcoin block headers), the usage of BTC Relay also increases and so does the incentive to become a relayer. With increased relayers, BTC Relay becomes autonomous similarly to Blockchain.
Read the full article, via International Business Times, here.