Upcoming Bitcoin news in 2018: The most promising technological developments
2017 was the best year for bitcoin, looking at the course. But from a technical point of view, everything is just beginning: the 2018 promises to be the year of launch of the most expected innovations.
Bitcoin Magazine made a brief overview of the most promising technological developments.
More Cheap Transactions with Segregated Witness
Segregated Witness (SegWit) has become one of the biggest or maybe the largest update of the bitcoin protocol. Launched in August 2017, it eliminated the problem of transaction flexibility and allowed the use of second-level protocols. In addition, SegWit made it possible to separate transaction signatures from the transfer process. As a result, transactions take up less space and the blocks become more capacious, which allowed to increase the number of transactions in the network and reduce the commission.
Nevertheless, the implementation of the update was rather slow. Not all wallets and services use the additional block space offered by SegWit. The bitcoin network is technically able to support from two to four megabytes of transactions in the block, but in fact is used slightly more than 1.1 megabytes.
In 2018, this may change.
First, the Bitcoin Core wallet interface will allow users to accept and send SegWit transactions. Scheduled for May 2018 (although dates may be moved) Bitcoin Core 0.16 is likely to receive a new address format from the developer Blockstream Peter Uyla, known as bech32. The format has several technical advantages that reduce risks and limit errors due to typos.
Also, several large companies, for example Coinbase, plan to move to SegWit in 2018, and LocalBitcoins has already done so.
Because their services handle a large amount of transactions, this can significantly reduce the network load, as well as reduce the cost of commissions and the time of confirmation, even for those who use other services.
Lightning network in the main bitcoin network
If the introduction of SegWit provides a short-term reduction in network overload, then in the long term, the scalability problem can be eliminated with the help of second-level solutions.
One of the most expected of them — the Lightning network protocol, proposed as early as 2015. It can provide almost free transactions and instant confirmation without the need to donate of security.
The solution is in active development for about two years with the participation of ACINQ, Blockstream and Lightning Labs. The progress in 2017 turned out to be significant: various but compatible software implementations were used, used in the interfaces of wallets and trial transactions, occurring both in the test and in the main network of bitcoins.
Christian Decker, a developer at Blockstream, says:
I would say that we solved the main technical problems and have a pretty good vision of how to improve the system. The last obstacle, which is worth mentioning, is the network topology: we want the network to be maximally decentralized.
Given the current state, the introduction of the Lightning network during 2018 is entirely possible.
Director General of Lightning Labs Elizabeth Stark notes:
Integration and testing will be the next important step. Some exchanges and wallets are already working on this.
Increased anonymity thanks to TumbleBit and ZeroLink
Bitcoin is not really so anonymous — this statement has become very popular lately. All transactions are included in the public block, and data analysis can tell a lot about owners and interactions between users. There are solutions that improve privacy right now, for example bitcoin mixers, but they require trusted parties and can lead to data leakage.
In 2018, the situation should improve significantly. The two most promising projects in this area — TumbleBit and ZeroLink — are entering the final stage.
TumbleBit was proposed in 2016 by a group of researchers led by Ethan Heilman. This is, in fact, a co-mixing protocol that uses a toggle switch (“glass”) to create payment channels from all participants to all in one mixing session. All participates quickly receive another’s bitcoins, covering users tracks. TumbleBit uses complex cryptographic algorithms to exclude the possibility of establishing links between users of the “glass”.
The initial implementation of the TumbleBit protocol was prepared in the beggining of 2017 by NBitcoin developer Nicolas Dorje. His work was picked up by other developers, and Stratis announced the introduction of this technology in his purse Breeze, which is scheduled to be launched by March 2018. In mid-December 2017, Stratis integrated TumbleBit into the beta version of the wallet.
The second perspective solution, ZeroLink, was proposed under a different name by Bitcoin Core developer and Blockstream technical director Gregory Maxwell in 2013. Unlike TumbleBit, ZeroLink uses a central server to connect all users without the ability to bind their transactions. It creates a single (CoinJoin) transaction between all participants, which makes the solution cheaper.
This idea was forgotten for several years, while David Fitchor (who also worked on TumbleBit) did not return to him in early 2017. He has already completed the initial implementation of ZeroLink.
Fitchor recently tested ZeroLink, which showed that refinements are needed, but not too significant. According to him, they will take several months:
I could release this solution for public access right now. In any case, during the mixing process there is no risk of losing money, and many rounds of mixing are performed correctly. Just some users may encounter errors that I would not like to correct on the go.
More sydchain
Saidcheyny are alternative blockhouses with coins that are connected with bitcoins. They allow users to efficiently move bitcoins in blockchanes, which are completely different, but use only “original” bitcoins. Saidchein can offer faster confirmations, or greater anonymity, or the possibility of using smart contracts, etc.
This concept was proposed by the CEO of Blockstream Adam Beck in 2014. Blockstream has launched a sidechain Liquid, which allows you to make instant bitcoin transactions between crypto-exchange exchanges. Liquid is currently in beta testing, but this year version 1.0 can be released.
Another long-awaited sidechain — RSK, work on which began quite a long time ago. RSK is designed to support Turing-complete smart contracts, which gives bitcoin the flexibility of the etherium. RSK is currently at the closed beta stage.
Signature of Shnorr
Signature Shnorra, named after its inventor Klaus-Peter Shnorr, many experts consider the best type of cryptographic signature for crypto-currency. It provides a high level of accuracy and is relatively quickly verified. With the activation of Segregated Witness, it would be easy to implement the signature of Shnorr in the bitcoin protocol.
The Shnorr signature algorithm allows you to sign all transaction data at the same time, while signing the ECDSA (which is used today), you must sign each part separately. In the context of bitcoin, this means a significant increase in scalability. The analysis assumes an average saving of 25% per transaction, which will increase the conductivity of the network by approximately 33%.
While it is difficult to predict whether Shnorr’s signature will be accepted in the bitcoin network. This will require softfock, and much depends on expert evaluation and testing.