What Are the Latest Upgrades on the Bitcoin Network?

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Bitcoin
What Are the Latest Upgrades on the Bitcoin Network?

The Bitcoin network has been around since January 3, 2009, when the pseudonymous Satoshi Nakamoto mined the chain’s genesis block. During that time, the network has undergone a series of upgrades to keep it in peak performance. These upgrades range from minor, regular tweaks to significant changes such as Segregated Witness (SegWit) and Taproot.

How Upgrades Are Made on the Bitcoin Network

Bitcoin is essentially an open-source network, meaning anyone can suggest changes to improve the blockchain. However, since the network has no centralized authority running it, the community uses a Bitcoin Improvement Proposal (BIP) system to communicate ideas and propose technical changes to the network. If those proposals are approved by a majority of the Bitcoin community, then they are implemented. 

Most BIPs usually emanate from a core group of developers, frequently referred to as “maintainers,” whose job is to monitor and improve the blockchain and its native cryptocurrency.

Bug Fix to Cut Out Fee Sniping

Lately, there has not been any major upgrade work done on the Bitcoin network. According to the community’s GitHub repository, the most recent upgrade on the blockchain was a minor bug fix to improve privacy for off-chain protocols and to include an anti-fee sniping feature for Taproot transactions. 

Fee sniping is when a BTC miner deliberately re-mines a block to wrestle away the transaction fee from the block’s original miner. This practice becomes an option for dishonest miners when they deem a previously mined block to be worth much more in transaction fees than what is currently in their own memory pool.

With BTC block subsidies diminishing, transaction fees will soon begin to dominate the network’s block rewards, and fee sniping may become a big problem in the Bitcoin mining space.

The anti-fee sniping upgrades made on the Bitcoin network are meant to curb this practice, which, if left unchecked, can render the blockchain unusable. This is because if more miners engage in fee sniping, fewer of them will work to extend the blockchain. And if the practice continues for an extended period, confirmation scores may no longer reflect transaction finality on the network.

Taproot Upgrade

But this last tweak aside, Taproot is still the most recent upgrade to the BTC network of any major significance. The upgrade took three years to develop and implement and enabled the integration of features that improved the privacy, security, and efficiency of the Bitcoin network.

The Taproot upgrade also expanded the Bitcoin network’s capacity for scripting programmable smart contracts, opening the door for decentralized finance (DeFi) protocols and non-fungible tokens (NFTs) on the blockchain.

While smart contracts can be deployed on the Bitcoin network, they are costly, time-consuming, and severely limit the number of transactions that can be executed on the blockchain. Taproot makes it possible to carry out multiple transactions from multiple parties to a single BTC wallet simultaneously. 

Taproot was an amalgamation of three interconnected update proposals: BIP 340, which proposed the use of Schnorr signatures; BIP 341, which was the Taproot proposal itself; and BIP 342, which addressed the use of Tapscript. All these proposals were aimed at improving Bitcoin’s scalability and efficiency.

Schnorr signatures replaced the Elliptical Curve Digital Signature Algorithm (ECDSA), previously used to generate keys and verify transactions on the Bitcoin network. Schnorr signatures are more secure and simpler to implement than ECDSA, and they make it possible for multiple transactions to be quickly verified in batches rather than being evaluated one at a time.

BIP 342 leveraged the efficiency of Schnorr signatures to enable greater flexibility in future upgrades to Tapscript, the scripting language used for Taproot script paths. 

The Taproot BIP itself offered a novel way to execute BTC transactions by activating a Merkelized Alternative Script Tree (MAST), which encapsulates a complex array of BTC transactions into one hash, thereby significantly reducing transaction fees, minimizing memory use, and expanding the flexibility and utility of the Bitcoin network.

The Taproot upgrade also greatly enhanced privacy on the Bitcoin network by making it nearly impossible to identify the parties in a transaction. It achieved this by disguising multiple-signature transactions as single-signature transactions.

Taproot was officially locked in on November 14, 2021, after more than 90% of the BTC community approved. The lock-in period gave all BTC miners and node operators approximately six months to upgrade to the most recent version of Bitcoin Core or implement alternative safeguards before the Taproot rules were fully activated.

Segregation Witness Upgrade

Taproot was built upon an earlier upgrade known as SegWit. But unlike the Taproot upgrade, which achieved consensus in the BTC community relatively painlessly, SegWit caused a “civil war” in the community before it was finally adopted.

SegWit was meant to resolve the issue of block size limitations within the Bitcoin blockchain. 

As Bitcoin became more popular and the number of transactions executed on it grew, the network became more sluggish because of the block size limit. Essentially, the blocks did not have enough memory space to handle the increasing volume of transactional data, which affected the rate at which these transactions could be handled.

To solve this, Dr. Pieter Wiulle, one of Bitcoin’s core developers, suggested that they needed to separate the digital signature of a transaction witness from the transaction data to reduce the memory space required to store a transaction.

The SegWit upgrade increased the network’s block size to create more data space and, subsequently, increase the speed at which transactions are validated. It also improved security on the Bitcoin network by curbing transaction malleability, which is the ability to change minuscule bits of information in a block.

The “civil war” triggered by the SegWit upgrade led to the splitting of the Bitcoin network and the creation of Bitcoin Cash (BCH). Opponents of the upgrade were advocating for an increase in the block limit but without Segregation Witness. Proponents of the upgrade felt such a move would compromise many of Bitcoin’s core properties, including decentralization. Without consensus, it became necessary to hard-fork the Bitcoin network.

Conclusion

Routine tweaks will continue to be made on the Bitcoin network to keep it purring along smoothly, but it is expected that Taproot will have far-reaching benefits as Bitcoin scales up and becomes more efficient. 

Additionally, Taproot lays the foundation for DeFi services on the Bitcoin network, offering users a great new opportunity to invest their funds.

While the Taproot upgrade has had little impact on the price of BTC due to the current volatile crypto market, analysts believe that the upgrade will increase Bitcoin’s value as trust in the blockchain grows.

Additionally, if Bitcoin adopts smart contracts, it stands to reason that it will eat into the market shares of major smart contract platforms such as Ethereum, Solana, and Cardano.

Julius Mutunkei

Julius is a blockchain reporter skilled at synthesizing all crypto-related information to make articulate texts easy for anyone to grasp. With a beginner's level certificate in Financial Analysis, Julius can read, interpret and report crypto findings to help investors exercise the best judgment in their decision-making process. When he is not caught up in the crypto frenzy, Julius likes playing a game of FIFA with his online buddies.