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BIP174: The Bitcoin Improvement Proposal That Would Make Offline BTC Transactions Possible

The Bitcoin Improvement Proposal (BIP 174) was added to Bitcoin’s official repository, potentially allowing the blockchain to support the famous “Partially Signed Bitcoin Transactions” (PSBT) in the future.

In the event that such a proposal is implemented, Bitcoin users may be able to perform offline transactions through a protocol that would allow them to establish standard formats for signing transactions without having to upload them to the network immediately.

The work is still in the development phase; however a large number of programmers have been testing and actively working for this modification to be integrated into the Bitcoin protocol successfully and without bugs.

An Important List of Supporters

A few days ago, the proposal was added by Andrew Chow, an active developer within the community, and has since gained much support in the community. One of the developers who joined the initiative was Peter Wuille, known for being the co-founder of Blockstream and for having actively participated in the development of Segregated Witness

The implementation of such solutions has enabled Bitcoin’s blockchain to improve certain essential aspects of its architecture. While initiatives such as Segregated Witness have been crucial to scalability, others such as the Lightning Network and Bip 174 promise significant advances in mass usability.

The proposal has been well-received by the community. One example is Alex Bosworth, who spoke out on Twitter in favor of this type of development:

There are already developers working to make this proposal a success. One example is Peter Gray, founder of Coinkite, a company that has already developed a portfolio called Coldcard, which supports transactions based on the PSBT standard:

According to the Linux Foundation’s mailing list, Mr. Wuille confesses himself to be a very excited believer:

“The new Coldcard hardware wallet is based on PSBT (ie. BIP 174 as published), and we consider it “PSBT Native.” It can add signatures to PSBT files delivered on MicroSD card and/or over USB, and is able to finalize PSBT files for lots of simple cases. It already works well against the existing BIP174 pull request.

I think the BIP174 spec is reasonable as it is, and should only be changed in a forwards-compatible way from this point… but obviously I’m biased.”

The proposal has not yet been voted on, and there is no information as to when it will be fully functional, however, the future looks quite promising and is likely to be implemented in the future.

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Schnorr on its Way to Become Bitcoin’s Biggest Improvement Since SegWit

Bitcoin is close to achieving a new improvement proposal. Known as Schnorr, this unique technology has been cataloged by several analysts as Bitcoin’s Biggest improvement Since SegWit.

Despite not having much hype during the early stages of its development, the slow but steady work of Pieter Wuille, an influential personality in the Bitcoin ecosystem, bore its first fruits a few days ago when he published a draft of his research, one that is not only viable but has been well received.

The draft is highly technical, to the point that it may not be very user-friendly. For example, it is enough to look at a few lines explaining the Schnorr design briefly:

Design

Schnorr signature variant Elliptic Curve Schnorr signatures for message m and public key P generally involve a point R, and integers e and s which satisfy e = H(R ||| m) and sG = R + eP. Two formulations exist, depending on whether and or R is revealed:

1. Signatures are (e,s) that satisfy e = H(sG – eP ||| m). This avoids the difficulty of encoding a point R in the signature.

2. Signatures are (R,s) that satisfy sG = R + H(R ||| m)P. This supports batch validation, as there are no elliptic curve operations inside the hashes.

In recent statements for Coindesk,. Yannick Seurin, one of the developers of the Schnorr project spoke about the potential of its implementation and how it could improve bitcoin transactions globally:

“Schnorr signatures and the applications they enable generate high hopes. As evidenced by the recent scaling debate, any efficiency improvement is highly beneficial to bitcoin.”

What is Schnorr?

Schnorr is a solution that would offer users a new method of generating the keys they need to make transactions and control their Bitcoin. This way it is possible to improve certain aspects such as transaction speed, privacy, and -above all- the scalability of the blockchain. One of the most controversial problems since the appearance of alternatives such as Segwit and Lightning Network.

Schnorr enhances Bitcoin’s current key generation system, the Elliptical Curve Digital Signature Algorithm or ECDSA. Once implemented it would provide mathematical proof that the algorithms are safe. Also, it will allow the use of less bandwidth in transactions, increasing efficiency and scalability.

Despite the potential, the work is still in development, Blockstream engineer and co-author Jonas Nick told CoinDesk:

“The specifics for how to deploy it in bitcoin are still being actively discussed…
Like any consensus change, it will be a long process involving fully fleshing out a draft for integration, publishing it, gathering comments from the technical community and ecosystem, writing implementations of both consensus rules and integration in wallet software, proposing a deployment plan, and if all goes well, get it activated”.

However, he also expresses in a few words his enthusiasm for the project and its importance for the future of Bitcoin:

“Standardizing Schnorr for bitcoin is a big step towards using it in bitcoin.”


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Bitcoin Developers Build Prototype for 'Dandelion' Privacy Tool

Developers hoping to bring a higher level of transaction anonymity to the bitcoin blockchain have built a prototype for their “Dandelion” privacy project.

The test, according to an email sent to the bitcoin development mailing list on Thursday, comes after the team behind the project added more theoretical analysis in a bid to address concerns that the initial Dandelion proposal may be exposed to a deanonymization attack.

A variety of projects have focused on this question within the bitcoin network, all of which seek to improve privacy for users of the public – and pseudonymous – blockchain. As previously reported by CoinDesk, the Dandelion Bitcoin Improvement Proposal (BIP) was first published in June of last year, backed by Zcash advisor and University of Illinois assistant professor Andrew Miller, and several other faculty members and students from the school.

The proposal initially aimed to introduce a two-phase route for bitcoin transactions: “stem,” which is the transaction itself, and “fluff,” which is an obfuscation phase that would eventually obscure the original IP address of a bitcoin sender.

However, following the proposal’s publication, Bitcoin Core developer Greg Maxwell pointed out that the tech may run into deanonymization over time, which means attackers will still be able to identify the origin by cross-checking transaction patterns.

Yet in the latest update, the team behind the Dandelion project have suggested a “per-inbound-edge,” which essentially aims to ensure Dandelion transactions sent from one node will be routed in different paths in the network in order to block the identification of traceable data.

Subsequently, the team has built a prototype and moved to test the project on its own small network, finding that so far Dandelion is compatible with existing versions of bitcoin, the team said.

“Dandelion does not conflict with existing versions of Bitcoin. A Bitcoin node that supports Dandelion appears no differently to Bitcoin nodes running older software versions. Bitcoin nodes that support Dandelion can identify feature support through a probe message,” the team wrote in an implementation document.

Dandelion image via Shutterstock

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Smart Contracts Proposal MAST Inches Closer to Bitcoin's Code

A long-standing proposal to bring “smarter” smart contracts to bitcoin’s main net has just taken one step closer to implementation.

Developers have submitted a pull request for Merkelized Abstract Syntax Trees (MAST), marking the first time this smart contracts proposal has been the subject of a pull request seeking its integration into bitcoin’s code.

The pull request combines pay-to-script-hash (P2SH) with MERKLE-BRANCH-VERIFY, allowing users to define how payments would occur. As previously reported by CoinDesk, these two features, combined with a third Bitcoin Improvement Proposal (BIP) called “Tail Call Execution Semantics,” would allow users to create private smart contracts on the bitcoin network.

These private smart contracts would allow users to define their own criteria by which a payment would process, enabling multiple factors to be considered by the program. The smart contracts would then execute on their own.

The combination of BIPs would also allow for these smart contracts to be stored in a compact manner on the actual bitcoin blockchain, meaning they would not take up a large amount of block space, or the amount of data that can be stored within each block of transactions.

If developers and the broader bitcoin community approve of the change, it could be added to bitcoin by way of a soft fork. Should they also approve the change, developers would use a soft fork to integrate it into the network.

Telecommunication mast image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Sidechains Project Pushes Ahead with Bitcoin BIP Submission

One of the developers behind the Drivechain project for bringing sidechains to bitcoin is seeking feedback on the project’s code as well as two improvement proposals related to the tech.

In a message on the bitcoin development email thread, Paul Sztorc posted links for two proposed Bitcoin Improvement Protocols (BIPs), both of which were dated Nov. 17, in an effort to begin getting feedback on the code developed thus far. The release comes just over two years after Sztorc first introduced Drivechain, marking one of several ongoing efforts to develop applications around the concept.

Sidechains concepts, including Drivechain, have been positioned as a way to test new functionalities for bitcoin without actually integrating them within the cryptocurrency’s code.

If implemented, they would effectively constitute interoperable blockchains that are pegged to the bitcoin blockchain. For example, a sidechain based on the transaction anonymity project Mimblewimble could allow for experimentation in that area that avoids the long and potentially contentious process of making changes to the bitcoin software.

At the same time, some developers have criticized the sidechains concepts, arguing that they, if introduced, could create new vulnerabilities in the system and lead to a less secure network.

For now, the BIPs put forward by the Drivechain developers are now available for review – “The most helpful review will probably take place on GitHub,” Sztorc wrote in the email thread – and as he indicated, neither have been granted formal BIP status.

Chains image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.