Bitcoin Will Have Two Important Fundamental Updates in 2020 That Will Improve Privacy and Security
On a video from Ivan on Tech, Ivan discussed some of the upcoming Bitcoin updates that we should see roll out in 2020. Let’s take a look at these updates and what we can expect.
Nothing should be considered investment or financial advice. Enjoy the ride.
Bitcoin Updates
Coming up in 2020, we get an exciting innovation happening to the grandfather of all cryptocurrencys, Bitcoin. The last big update to Bitcoin Core was made in 2017 and resulted in the hard fork of the Bitcoin community.
This hard fork resulted in Bitcoin Cash which at the time was led by the renown “Bitcoin Jesus”, Roger Ver and the infamous “Real Satoshi”, Craig Wright. Clearly, we know Roger has been shilling BCH as the real Bitcoin since 2017, going as far as tricking new investors into purchasing Bitcoin Cash instead of Bitcoin by calling Bitcoin, Bitcoin Core.
Likewise, Craig has gone crazy and pretty much fallen off the deep end. He has relentlessly been attacking Bitcoin for years, forked from Bitcoin Cash to create his own version called Bitcoin Satoshi’s Vision, tried to sue just about anyone who talks poorly of him, lost a lawsuit for billions of dollars, and currently for some reason not in jail.
Not to mention, he helped crash the market at the end of 2018, cost investors and miners billions of dollars, and pretty much has been rejected from the entire crypto society. Again, why is he not in jail?
Bitcoin Privacy and Security
Now that we reviewed what happened last update, let’s look at what we can expect this time.
Currently, the network is close to it’s all time highs. Bitcoin’s price has been sideways trading but maintaining a healthy level above $7,000, and every country is starting to take it seriously. Easy to say, the landscape of the industry has changed drastically since 2017.
Looking further into the actual updates, there will be two main developments, but they will probably happen simultaneously. The first update is to change the signature method from elliptic curve signatures to Schnorr signatures.
Schnorr Signatures
The former signature method was called Elliptic curve digital signature algorithm or ECDSA for short. Unfortunately, the elliptic signatures are not the most secure nor do they host the highest level of optimization on the market currently. Therefore, the shift to Schnorr signatures is being made to strengthen the network and increase the scalability threshold.
In the start Satoshi had to use ECDSA because in 2009, Clause Schnorr had a patent on the Schnorr signatures. The patent has since expired and now Bitcoin can be updated to use its technology to reduce the size of data stored on blocks by minimizing the UTXO data.
In addition, Schnorr signatures also has increased levels of privacy. When you have a multi-sig transaction, each and every input is coming from several different people. With ECDSA, you can actually tell the signature is coming from multiple people, but with Schnoor, you can create an aggregated key for all of the participants instead of pieces of the key like ECDSA.
The next part of the update will focus on privacy, and that part is called Taproot.
Taproot Update
The Schnorr signature is an update that taproot requires which is why it makes sense to discuss Schnorr first. While Taproot will not do as much as Schnorr, it fundamentally will allow the use of the aggregated key which will allow more privacy onchain.
Taproot is really an extension to the Schnorr sigs. It is more complicated, but what it will open up is the ability for all transactions to look identical on the outside. So, on the block explorer currently, you can see inputs and outputs per transaction, but with Taproot, each transaction should in term become similar leading to less clues for people to figure out where money is going.
Pricing in the Development
Ivan has a fun chat about the idea of pricing in these developments.
It is true that as Bitcoin grows in network and with the halvenings, the price should organically grow, but what about the developments? Should the agenda change for investors like myself to know that Bitcoin is not only becoming more scarce, but also more functional? The answer is, of course.
You see, as Bitcoin continues to develop, grow, and mold, its lifetime should in turn extend. The usability or utility of the asset should grow and promote the project to more and more investors. At the end of the day, I do not want to invest in a stagnant asset or project. I want to invest in something that has potential to change, mold, adapt to its challenges and become even better over time. That is what Bitcoin is doing.
Of course, that is just my opinion on the changes and does not represent everyone’s take on the updates.
