Smart contracts based on the Bitcoin Blockchain will soon be promoted by a kind of cooperative of Bitcoin startups.

In a memorandum of understanding yesterday, several international Bitcoin companies agreed to form a cooperative to drive the development of a smart contract platform based on the Bitcoin blockchain.

The RSK Federation is based on the RSK Smart Contract Network developed by the Buenos Aires-based startup Rootstock.

The CEO and co-founder of Rootstock, Diego Gutiérrez Zaldívar, describes the founding of the cooperative as an “important signal of the Bitcoin ecosystem”. It also encourages companies to use sidechains that extend the functionality of the Bitcoin network.

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Among the 25 companies that have agreed to participate in the cooperative are among others: Bitfinex (Hong Kong), BitGo (San Francisco), BitOasis (Dubai), Bitpay (Atlanta), Bitstamp (Luxembourg), BTCC (Shanghai), JAXX (Toronto), Xapo (Palo Alto).

To operate smart contracts secured by the Bitcoin network, RSK uses a hybrid security model that combines elements of the proof-of-work concept with those of a private network.

“The combination will provide several key elements and services to develop practical smart contract applications,” said the other Rootstock co-founder Gabriel Kurman.

Some of the larger companies that co-signed the agreement intend to provide data to the network and help validate contracts.

RSK already launched a test network called Lotus in May 2016, but it is still at least a year away from a practical application or business solution.

Members support Smart Contract development

In order to close the gap as quickly as possible, some member companies are going far beyond what they promised in the letter of intent.

The founder of Bitcoin Wallet provider Xapo, Wences Casares, believes that the RSK network will one day be able to outperform Ethereum-based smart contracts because the Bitcoin blockchain is much more robust.

In order to advance this vision, Xapo has agreed to support Rootstock to the best of its ability and provide wallets for the RSK tokens, as well as help out with its own staff.

However, not all companies involved are exclusively focused on Bitcoin. JAXX, for example, offers a wallet that should work with all digital currencies and BitGo offers security services for various blockchains.

More than a crypto currency
Regarding the timing, the accusation could easily be made that this is an opportunistic move, since Ethereum has to fight hard for the execution of the Hard Fork and is criticized for it. Kurman emphasizes, however, that timing is detached from this, especially as many participating companies also offer Ethereum services.

“Our goal is to give the poorest people in the world access to financial services… But to benefit from the problems of others is not our thing.

Tumeric is the name of the next version of a test network and is to be launched at the end of September 2016. Until then, a lot of coordination work between the companies will still be necessary.