3 Most Promising Bitcoin Improvement Proposals (BIPs)

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While the bitcoin is the best known and most valuable crypto currency, its blockchain faces numerous challenges. To overcome these challenges and expand the crypto currencies, pioneers have created many new currencies, each with its own blockchain. These in turn are designed to provide features that bitcoin cannot compete with. As if this set of features weren’t attractive enough, one of these new currencies might even knock bitcoin off his throne.

In an effort to maintain the dominance of bitcoin, Bitcoin Core developers are working on a variety of bitcoin improvement proposals, known as BIPs. BIPs refer to a document that allows developers to make a proposal developed to address a bitcoin network problem. Let’s take for example the presentation and implementation of BIP 141, better known as Segregated Witness (SegWit). As a result, the speeds in the Bitcoin network have accelerated, which has also significantly reduced transaction fees.

In addition, the software upgrade helps to provide numerous advantageous functions. While most BIPs have the potential to positively influence the bitcoin blockchain, there are also some that cannot keep their promises to the announced extent. In this article we look at the three most promising Bitcoin Improvement Proposals.

The Lightning Network

The Lightning Network is a BIP, first announced in 2015 by Joseph Poon and Thaddeus Dryja. It wants to make the bitcoin scalable by introducing instant payments that take place off-chain, i.e. outside the block chain. “Creating a network of micropayment channels makes it possible to scale the bitcoin and micropayments that can be reduced to satoshi (0.00000001 bitcoins) and almost instant transactions. These channels represent real bitcoin transactions by using bitcoin scripting opcodes to handle money transfers without the risk of theft by a third party, especially with long-term Miner risk mitigation”.
The Lightning Network was made possible by the introduction of multi-signature wallets, through which the parties can process an unlimited number of transactions without storing all details in the blockchain. The only information recorded is the amount of bitcoins in the wallet and the percentage of parties involved.
BIP 112 contains a part of the code that needs to be implemented to make the Lightning Network possible. The upgrade would be implemented as a soft fork.

In addition to activating direct transactions, upgrading the Bitcoin blockchain would also bring other benefits. For example, micropayments and cross chain payments would be made possible. The upgrade would also simplify the introduction of the Smart-Contract function in the Bitcoin blockchain.

M.A.S.T.

M.A.S.T. stands for Merkelized Abstract Syntax Trees. It is a cryptographic tool that would allow the addition of complicated datasets to data related to the bitcoin blockchain. The other way around, M.A.S.T. makes it possible to further define data and at the same time reduces the amount of data that has to be recorded in the blockchain.

M.A.S.T. is a combination of two tools. Namely the two algorithms Merke Trees and Abstract Syntax Trees. Merkle Trees are a data recording option that eliminates the need to download all data before confirming that it belongs to the respective data set. This is made possible by the use of Merkle Root. Abstract syntax trees refer to the sharing and labelling of data in a data set. Combining both algorithms then allows complex data sets to be added to a block chain while reducing the amount of data that is recognized as part of a transaction.

There are BIPs that plan to implement M.A.S.T. in the Bitcoin network. The first of them is Bitcoin Core developer Johnson Lau’sBIP 114, a proposal to increase network efficiency by introducing a new script that he himself describes as “merkelized”. The script would reduce the need for large transaction data while providing greater transaction privacy.

BIP 116 and BIP 117 were both developed by Bitcoin Core developer Mark Friedenbach and are designed to activate M.A.S.T. on joint implementation.

In BIP 116, it describes an opcode that would make it possible to confirm the data in question as true without disclosing the entire data set. BIP 117 is called Tail Call Semantics and would produce a generalized form of M.A.S.T. in conjunction with the aforementioned BIP. The difference between Friedenbach’s and Laus Proposal is that the first BIP currently supports all scripts in the Bitcoin network, whereas the latter would only support native SegWit addresses.

The implementation of M.A.S.T. would bring greater privacy, fast transaction speed and the possibility of integrating complex data sets such as Smart Contracts. Furthermore, M.A.S.T. would enable the Bitcoin network to handle a much larger transaction volume and thereby improve scalability.

Confidential Transactions

Gregory Maxwell is currently working on the concept of Confidential Transactions for the Bitcoin network. As the name suggests, this BIP provides a privacy layer for data within the Bitcoin network. This would apply to the number of transactions as well as the addresses affected by them.

Before SegWit, implementing confidential transactions in Bitcoin blockchain would have required a hard fork. Since the upgrade, however, it has been possible to add and implement the code using Soft Fork.

The activation of confidential transactions would enable Bitcoin to compete with other privacy oriented coins such as Monero (XMR) and Zcash (ZEC), which have benefited from the increasing demand of users of digital currencies for transaction privacy.

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