While we see a lot of Bitcoin news in mainstream media, one thing that often gets overlooked is the developments made to improve the technology.
Bitcoin technology saw major developments and upgrades in the past year [2020] and has some promising updates coming in 2021.
[2020]
Lightning Network:
One of the key developments within the Lightning Network in 2020 has been Watchtowers, which makes the protocol more secure.
One of Lightning Networks' drawbacks is that it made it possible for users to cheat and claim more funds than actually allocated to them. The partner user can stop this from happening but it requires continued monitoring of the bitcoin blockchain.
To avoid this, Watchtower was implemented which allows channel monitoring to be outsourced to impartial observers.
Taproot:
Taproot is supposed to be a major upgrade to the bitcoin protocol which would bring about huge improvements to the bitcoin’s scalability, fungibility, & privacy.
Taproot would essentially make smart contracts look like regular bitcoin transactions, thanks to Schnorr signature,
Using this will greatly reduce the transaction size giving room for more transactions on the block and increase privacy.
Taproots activation has been a topic of discussion for the past couple of months and various activation and consensus mechanisms are being tested.
PayJoin and CoinSwap:
PayJoin and CoinSwap are two protocols that were designed to increase the privacy of bitcoin transactions.
Currently, bitcoin transactions are not exactly private they are pseudo-anonymous, meaning with a little tracking they can be traced back to the user.
With PayJoin, or Pay to EndPoint [P2EP], the user sends funds to themselves while also receiving funds from the actual receiver. This tricks anyone tracking the funds to think that all the funds belong to the same person when in fact that is not the case.
Vaults
Bitcoin Vaults are a type of smart contract that will require bitcoin transactions several confirmations and a time delay to actually be spent.
This will time for the potential victim to reverse the transaction and get back the stolen bitcoins.
Smart Contracts - DLC
This update, designed for smart contracts, will bring about a change in how they operate when they rely on external data [data that does not live on the blockchain].
MINSC
A Miniscript-based scripting language for Bitcoin contracts, MINSC would greatly simplify the creation of bitcoin transactions.
[2021]
Bech32m
It is expected that Bech32m will support Taproot and all future segwit based script updates.
Private Key
This feature will add an update to the bitcoin wallets through which users will not be able to send transaction(s) from their wallet if the private key is disabled.
Multiple fee rate request
This update would bring about a change to the fee rate selection process that happens during the coin selection. It would essentially avoid coin selection from failing.
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