In summary, 2017 was a big year for Bitcoin. The meteoric rise of around 1,500 percent helped Bitcoin land on the headlines of countless major news outlets.
But there is also a lot of controversy surrounding this cryptocurrency. For many who have no full grasp of the subject, the terms “Ponzi scheme” or “bubble” are often brought up.
And for the ones that understand the technology behind Bitcoin, most would consider blockchain as the future.
But enough talk about 2017, and let’s look forward. In this article, we are going to list a few of the most important technological developments coming to the king of digital currency.
While claiming “Bitcoin is the future” has its merits, the digital currency king does have its own problems right now. Decentralized technology may be very resilient and robust, but its strength is also its Achilles heel.
Because of how blockchain technology is designed, it’s very hard for it to scale. In other words, it’s very difficult for the system to cope with increasing usage.
This is the reason why Bitcoin users these days are concerned about “super slow” and “sky-high” transaction costs. But Lightning Network aims to solve this problem.
It is a scaling solution that’s designed to be a second-layer answer to this issue. The system can be difficult to understand on a technical level, so we’ll describe the general idea of how it works:
With Lightning Network, you open a channel and “deposit” Bitcoins into it.
As long as there’s Bitcoin in your channel and/or you choose to keep it open, you can send Bitcoins to another Lightning Network user for a near-free fee.
Once your channel is closed, the data is then transmitted to the Bitcoin blockchain for processing into the public ledger.
This essentially means that you can do multiple Bitcoin transactions and you only have to pay for the Bitcoin transaction costs once.
The technology tremendously relieves a lot of pressure to the network, and that means faster transaction speeds and significantly lower transaction costs.
SegWit is short for Segregated Witness. It’s a major upgrade to the Bitcoin protocol, and it’s designed to help lower the transaction costs and increase transaction speeds.
The difference may not be as huge compared to the proposed Lightning Network, but it still helps the network nevertheless.
How SegWit helps ease the network load is by changing the block limit. As of the moment, each Bitcoin block is one MB.
However, it’s a block size limit. SegWit helps by increasing the block weight limit. By doing so, the system can be “tricked” into cramming more data per block.
According to experts, with SegWit, each block can effectively store two to four megabytes worth of data.
TumbleBit And ZeroLink
While the average user may think that Bitcoin is anonymous and private, this is not necessarily true.
Since the digital currency uses a public ledger, anyone can view randomized code identifying the sending wallet and receiving wallet, along with the amount being sent.
With this system, anyone can simply follow the money trail and render the user “exposed,” to some extent.
They each have their own exact method of implementation, but the general idea is all about using a “tumbler.” This means that before a receiving wallet can receive the money, the funds first go through a tumbler system.
Since the “tumbler” is essentially a large pool of Bitcoins owned by a lot of people and being tumbled around, it’s almost impossible to follow the money trail.
This allows a tremendous upgrade in terms of privacy and anonymity.
Schnorr Signature is named after its inventor, Claus-Peter Schnorr. According to many cryptographers, the Schnorr Signature is the best cryptographic signature.
Adding a Schnorr Signature results to plenty of upgrades from increasing accuracy to a plethora of new mathematical-based additions.
At the moment, the most attractive feature of the Schnorr Signature system is that it helps with Bitcoin’s scalability.
In accordance with the design of Bitcoin, there’s a private key and public key. The technology is also designed with varying signatures.
The problem only surfaces when huge amounts of transactions, private keys, public keys and signatures are processed and/or generated, as this can significantly tax the network.
But Schnorr Signature can help make this process efficient as it aggregates the multiple signatures into one master signature. In fact, some experts claim that it can increase efficiency by as much as 30 percent.
For many, Bitcoin is simply a new form of digital currency that has only a speculative potential of making money. But in reality, especially judging by its growth throughout 2017, Bitcoin is so much more.
It’s a platform in which new ideas and technologies can be built upon.
Knowing the fact that Bitcoin is relatively new, users can only expect more new features and fresh technology to come in the very near future.