Bitcoin is constantly changing in order to meet the requirements of modern days. Its developers are trying to modernize the code, to make this network more scalable and functional. The Bitcoin Core is now on its 23-th version! So a lot has changed since the beginning. In this article we’ll learn about the most famous updates in the Bitcoin Network.
SegWit is short for Segregated Witness. It is an update that has helped Bitcoin a lot – it went live in August 2017 as a soft fork. SegWit was the first step on the way of Bitcoin updates like the Taproot. However, not everyone in the BTC community was happy about it. Users that could not agree with this new change, created a new fork that is called Bitcoin Cash. You can read more about Bitcoin forks in this article
SegWit helped to make Bitcoin transactions smaller by putting away the witness data from the block. This free space now is used for other transactions. This update also helped with malleability of transactions – it’s when a part of a transaction can be changed after it has been signed without invalidating the signature. SegWit acceptance became popular in 2021 and now its adoption level is at 84%.
The Lightning Network
The Lightning Network update is a layer-2 network designed to speed up transactions on the Bitcoin blockchain and reduce their cost. The main thing about this change is that operations are made outside the main chain, so they do not overload it. However, they still come with some fee.
The Lightning Network is based on functions of smart contract, it gives users the opportunity to make small and instant transactions off-chain. Because of that, transaction fees are low. The Lighting Network helps to solve Bitcoin’s scalability problem. The of the Lightning Network grew this year despite the crypto winter
Taproot
To improve the scalability of the network, as well as privacy and security of Bitcoin Network, developers proposed a modification of the protocol scripts – the Taproot Bitcoin soft fork. This update was combined with a major update called Schnorr Signatures.
Taproot is a Bitcoin soft fork aimed at modifying protocol scripts to improve its operation in many ways. The chosen name is symbolic, it shows the essence of the update: parts of transaction data will be stored metaphorically speaking “deep in the soil”. This upgrade does not require a change in consensus models and can be done without restarting or shutting down the network.
Greg Maxwell first thought about using Taproot. He worked in the developers team of the original Bitcoin Core, at the beginning of 2018. Taproot was integrated in the Network only in October 2020. In order to be effective, many miners had to accept this update first. As of June 2021, the Taproot update has of 98% miners.
The Liquid Network
Liquid Network is a private centralized sidechain of the Bitcoin blockchain. It is developed by the Canadian company called Blockstream and it went live in October 2018. In total, Liquid Network has 44 partners, including Atlantic Financial, OKCoin, Xapo, Bitfinex, Bitmax, BitME, BitMEX, Ledger, Tether, and Xapo among others.
Liquid Network is a separate blockchain built on top of the main Bitcoin network. With its help we can make large transactions instantly. They are made by using Liquid Bitcoin (L-BTC) – this token is linked to Bitcoin as a 1:1.
A Bitcoin mainnet user first sends coins to an outgoing swap wallet address that acts as a bridge between the sidechain and the mainnet. In it, the coins are "frozen" by a group of validators – this eliminates the possibility of spending the coin elsewhere. Validators also ensure that every BTC on the sidechain has a BTC frozen in the wallet. After that, the amount of L-BTC equivalent is transferred to the sidechain. When users want to make a transfer from the sidechain to the main blockchain, everything happens in the reverse order.
FediMint
Fedimint is an open source protocol that helps Bitcoin to solve privacy problems. The protocol is based on the concept of multi-signature. Users can give the right to access the cryptocurrency to someone they trust, for example, relatives. This allows them to exclude third-party users from the equation. With BTC transactions there is no privacy – everyone can see them, if they want to. Plus traders usually store their assets with third parties like exchanges. FediMint helped to solve these two problems.
With this protocol it is possible to split the trust between several people in a federated mint. If you send Bitcoin to this mint, then the recipient will get Ecash tokens — and these tokens can be sent to the mints privately.
Conclusion
Now you can see that the Bitcoin Network step by step is getting closer to its full potential. The developers’ work never stops, so we can be sure that the network is changing and we should follow this exciting process. Each update affects the network, its use and functions, and makes it better and more convenient for us.
