What’s next for Bitcoin? It’s the number one cryptocurrency by market cap, with a total of $71 billion resting on its shoulders. But, like any piece of code, it needs updating, with new features. But it’s not always easy to see what’s coming.
Checking out Bitcoin’s next steps means parsing through wordy and technical Bitcoin Improvement Proposals (BIPs)—even then, it’s hard to see which ones will go through because it depends on community approval. So, we’ve done the work for you, and spoken to several Bitcoin Core developers to find out what’s next for Bitcoin. Here’s the lowdown on all the juicy proposals which have not yet been implemented—so it is not clear when, or even if, they will make it into Bitcoin. Our guide, then, is not definitive, but for now, here are the main features we see coming soon to the Bitcoin blockchain:
- Bitcoin will become more private
- It will have better support for the Lightning Network
- Light clients will make it usable on your phone
- The Bitcoin blockchain will stay relatively small
The majority of the proposals in this article are expected to be laid out in an upcoming soft fork proposal, according to Lucas Nuzzi, director of technology research at Digital Asset Research. He estimates such a soft fork could be implemented as early as Q3, 2019.
This guide doesn’t dwell on the myriad developments taking place on the Lightning Network, although it does refer to it. (Spoiler alert: There may be a separate guide coming on what’s next for the Lightning Network.)
We’ll try to keep it light. Let’s go.
Bitcoin will become more private
One problem with Bitcoin is that it can be easy for people—and companies—to track transactions. This is because all transactions are made on a public ledger, that anyone can access.
One of the ways Bitcoin users have made their transactions more private is through using multiple inputs—this is known as MultiSig, and means that another user or users must sign a transaction before it can be broadcast onto the block chain. This makes it more difficult for blockchain analytics platforms to follow the money trail. But right now, each input requires its own signatures, which still gives away too much information.
A solution to this is signature aggregation, enabled by Schnorr signatures—which have yet to be introduced. Signature aggregation allow someone to broadcast multiple inputs for a transaction but sign all of the inputs with just one signature. It obscures who really made the payment and where the money moved from. A good explainer can be found here.
A BIP for adding Schnorr signatures to Bitcoin is yet to materialize, but one is expected within the next two weeks. Bitcoin Cash—which forked from Bitcoin in 2017—is set to introduce them in its May update.
“I think the main focus of consensus changes right now is around Schnorr signatures, Taproot/graphroot, SIGHASH_NO_INPUT, etc. So I’d think those would be the key consensus-level changes over the coming years,” Bitcoin core developer Matt Corallo told Decrypt .
There is also a plan to standardize MultiSig transactions to stop incompatibility issues. You can see the proposal here.
A separate approach to making Bitcoin more private is a proposal called Dandelion. This makes it harder to track the location of a person who makes a Bitcoin transaction. It increases anonymity, because, when someone makes a transaction, it gets sent to other random nodes before it is broadcast.
There are other potential privacy updates for Bitcoin, such as confidential transactions, where data is hidden—but these would require a major network upgrade. They are also controversial because they make it harder to check Bitcoin is working as it should be. So we don’t see such major privacy updates happening soon.
Bitcoin will have better support for the Lightning Network
The Lightning Network is a pretty complicated piece of tech. Not only does the system itself need to work but it also needs to integrate with the Bitcoin network. There’s also an issue with the Lightning Network that is causing people to lose their funds, and Bitcoin’s infrastructure isn’t quite ready to support a fix.
The main problem lies in the infrastructure of the Lightning Network. It’s a system that penalizes people who broadcast an old version of their Bitcoin balance. While this is good because it stops them from claiming they own more Bitcoin, it’s a problem for those who have genuinely made a mistake and accidentally submitted an older version.
Christian Decker, a core engineer at Blockstream—which builds Lightning technology—has proposed a solution called eltoo. It ensures that Lightning nodes—which the network runs on— retain only the latest version of events and not the intermediary stages. But it requires one crucial piece of code which Bitcoin doesn’t have in order to work.
In comes SIGHASH_NOIMPUT. This bit of code allows certain parts of transactions to be signed at a later date. It allows the nodes to use only the first and last versions of events and stops older ones being accidentally submitted. This should stop people from losing their money on the network.
Sighash was proposed in July, 2018, but hasn’t yet been put into Bitcoin.
New apps will run Bitcoin on your phone
The Bitcoin blockchain weighs 208 gigabytes—and it keeps on growing. That’s a lot for any phone to handle. This is why most people use a software wallet on their phone when making transactions on the go. But there’s one downside to using a software wallet—you have to trust the wallet.
While most people are happy to do this, others may feel that it is not really the trustless environment that Bitcoin inventor Satoshi Nakamoto envisaged. So is it possible to have an application on your phone that checks Bitcoin transactions, so you don’t need to trust a third party?
The answer lies in SPV light clients. These are streamlined versions of the Bitcoin blockchain that only contain some of the data, namely the header information for each block. If a certain transaction or block needs to be checked, the SPV client can download the relevant block to do so. This keeps data usage to a minimum.
The main SPV light client being built for Bitcoin is called Neutrino. The project is spearheaded by Bitcoin developer and educator Jimmy Song. Neutrino lets you keep control of your private keys—therefore your Bitcoin—and lets your phone check the Bitcoin network without having to trust a third party. You can read more about Neutrino here.
SPV light clients are not without controversy. Nicolas Dorier, a server maintainer at BTCPay, has criticized them because they move trust away from a third party—like a block explorer—to a random Bitcoin node, which could be equally compromised. This has created a debate about whether SPV light clients are an ideal solution, but it still seems likely they will be implemented.
The Bitcoin blockchain will stay small-ish
Small is beautiful. It’s easier for everyone to run a Bitcoin node if the blockchain is small. So, there are efforts underway to stop it from growing too large over time, especially as more features are introduced.
One way of doing this is through Merkelized Abstract Syntax Trees, known as MAST. It’s a combination of two different algorithms—including merkle trees, which Bitcoin already uses—that make more complicated uses possible. Crucially, it also uses less space.
There is one tradeoff. MAST-based transactions can look different from normal Bitcoin ones. This isn’t good for privacy because it’s easier to identify someone who makes a lot of MAST-based transactions.
MAST was first proposed in BIP 114 in September 2017 by developer Johnson Lau. In November 2018, developer Mark Friedenbach created BIPs 116 and 117, which together would enable MAST. All of these would entail soft forks, meaning they are more likely to go through (hard forks have been known to be contentious, and take longer to get into the Bitcoin code.)
There is an alternative option to MAST, called Taproot. Developer Gregory Maxwell argues that it provides all the same benefits, without the tradeoffs, and ensuing transactions would appear identical to normal Bitcoin ones. Yet it does need one thing: Schnorr. But, as we said, that could be coming to Bitcoin soon.
The combination of these new updates will help to make Bitcoin smaller, more private and more compatible with the Lightning Network. But as to when they will get implemented, it’s anyone’s guess.
Please note: This article has been amended to show Shnorr signatures themselves do not aggreagate signatures but are a precurser for doing so.
This post was originally published on Decrypt. Bitnewsbot curates, examines, and summarizes news from external services while producing its own original material. Copyrights from external sources will be credited as they pertain to their corresponding owners.