Friday, 20 April 2018

The 3 most promising Bitcoin improvement proposals (BIPs)

While bitcoin is the most well-known and valuable cryptocurrency, its blockchain faces a number of challenges. To move beyond these challenges as well as grow the cryptocurrency space, innovators have created many new currencies each with their own blockchain designed to provide features that are unavailable with Bitcoin. Ultimately, given its feature set is compelling enough, one of these new currencies could potentially knock bitcoin from its number one spot.

In an effort to ensure bitcoin's continued dominance, Bitcoin Core developers are working on a number of Bitcoin Improvement Proposals (BIPs). BIPs refer to a document through which developers can introduce a recommendation that is designed to fix a problem within the Bitcoin network. For example, following the introduction and implementation of BIP 141, more commonly known as Segregated Witness (SegWit), transaction speeds on the Bitcoin network have increased and transaction fees have dropped substantially.

Moreover, the software upgrade helps to provide a number of advantageous features. While most BIPs have the potential to affect the Bitcoin blockchain positively, some hold more promise than others. In this article, we profile the three most promising bitcoin improvement proposals.

Lightning Network

The Lightning Network is a BIP proposal first outlined in 2015 by Joseph Poon and Thaddeus Dryja. It aims to make bitcoin scalable by introducing instant payments that occur off-chain. “Creating a network of micropayment channels enables bitcoin scalability, micropayments down to the satoshi (0.00000001 Bitcoins), and near-instant transactions. These channels represent real Bitcoin transactions, using the Bitcoin scripting opcodes to enable the transfer of funds without risk of counterparty theft, especially with long-term miner risk mitigations.”

The Lightning Network is made possible by the introduction of multi-signature wallets where parties can conduct an infinite number of transactions without the need to store all the details on the blockchain. The only information that is recorded on the blockchain is the amount of bitcoin contained in the wallet and the contribution percentages of the involved parties.

BIP 112 contains some of the code that needs to be implemented in order to make the Lightning Network a possibility. The upgrade would be implemented as a soft fork.

In addition to enabling instant transactions, the upgrade would also introduce other advantages to the Bitcoin blockchain. For instance, allowing for micropayments as well as cross chain payments. Moreover, the upgrade would also facilitate the introduction of smart contract functionality on top of the Bitcoin blockchain.

M.A.S.T.

M.A.S.T. stands for Merkelized Abstract Syntax Trees. It is a cryptographic tool that would enable the addition of complicated data sets into the data associated with transactions on the Bitcoin blockchain. Conversely, while M.A.S.T. makes it possible to further specify data, it simultaneously reduces the amount of data that needs to be recorded on the blockchain.

M.A.S.T. is a combination of two tools. The two algorithms are Merkle Trees and Abstract Syntax Trees. Merkle trees are a way through which data is recorded, removing the need for all data to be downloaded before confirming that the data belongs in the set. This is made possible through the use of a Merkle root. Abstract Syntax Trees refer to the division and labeling of data in a set. The combination of these algorithms is what makes it possible to add complex data sets to a blockchain while still reducing the amount of data recognized as part of a transaction.

There are three BIPs that aim to introduce M.A.S.T. into the Bitcoin network. The first is BIP 114 created by Johnson Lau, a Bitcoin Core developer. The proposal is aimed at increasing efficiency within the network by introducing a new script which he refers to as merkelized script. The script would reduce the need for large amounts of transaction data while upholding greater transaction privacy.

BIP 116 and BIP 117 have both been proposed by Bitcoin Core developer Mark Friedenbach and are designed to enable M.A.S.T. when implemented together. In BIP 116 he outlines an opcode that would allow the data in question to be confirmed as true without revealing the entire data set. BIP 117 is called Tail Call Semantics and in conjunction with the former it would bring about a generalized form of M.A.S.T. The difference between Friedenbach’s and Lau’s proposals is that the former supports all the scripts currently within the Bitcoin network while the latter would only support SegWit native addresses.

The implementation of M.A.S.T. would lead to increased privacy, faster transaction speeds as well as the possibility of the inclusion of complex data sets such as smart contracts. Furthermore, M.A.S.T. would allow the bitcoin network to handle a much larger transaction volume and, thereby, improve its scalability.

Confidential Transactions

The concept of Confidential Transactions for the Bitcoin network is being worked on by Gregory Maxwell. As the name suggests, this BIP involves introducing a level of privacy to the data contained within the Bitcoin network. This would apply to the amounts transacted as well as the addresses involved.

Before SegWit, the addition of confidential transactions to the Bitcoin blockchain would have required a hard fork. However, since the upgrade, it is possible to add and implement the code through a soft fork.

The enabling of confidential transactions would allow bitcoin to be able to compete with the other privacy-centric coins such as Monero (XMR) and Zcash (ZEC), which have benefitted from an increase in demand for transactional privacy by digital currency users.


source: bravenewcoin.com 
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