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Then and Now: Innovations in Bitcoin’s Technology Stack

Ever since cryptocurrency had been invented, its supporting technology, the blockchain public ledger, has been on a continuous path of evolution.  

Bitcoins were first introduced in 2009, post which the market witnessed the development and introduction of other cheaper alternatives—Bitcoin paved the way for Ethereum, Litecoin, and Dogecoin.

Consequently, blockchain has evolved from finding application in the development of Bitcoin first, followed by its applicability in the development of Ethereum. 

2018 onwards, blockchain has entered phase three of its evolutionary process where several projects are trying to leverage blockchain’s capabilities, and further contribute to the enhancement of blockchain technology to address its current limitations. 

However, Bitcoin’s core properties still remain unchanged; its nature has been and will always be decentralized and anonymous. These qualities have been Bitcoin’s greatest strength—and a major obstacle at the same time.

The Obstacles to Building 

Obvious obstructions to building Bitcoin technology have been the realization that Bitcoin is not a part of any monetary system, technology, or financial instrument. Instead, it is an entire economic system aided by blockchain technology. 

 Blockchain is constantly evolving, but its complex nature, scalability issues, vulnerability, and higher energy consumptions are the potential hurdles lying on the path of its development. Interoperability is another area where a lot of improvement is needed.

However, these challenges can be overcome; and requires a more creative and out-of-the-box problem-solving approach from its developers.

Experts usually draw parallels between Bitcoin’s growth and development and the development of the internet protocol suite. Different technological schemes have come together to enhance the overall experience of what we do with the internet today. Similarly, Bitcoin’s technology would require such processes.

Bitcoin’s Technology Stack 

The prominent innovations in Bitcoin technology have been in mining, privacy, sidechains, Layer 2, performance, usability, and smart contracts.

Layer 2 technology is one of the most talked-about technological feats in the Bitcoin world. The network layer primarily transfers data between adjacent network nodes within a vast network area or between the same nodes within the local area network.

Virtual LANs (Local Area Network) describe the broadcast domains in the Layer 2 network. It is similar to the TCP/IP (Transmission Control Protocol/ Internet Protocol) network model system. A Frame is the smallest unit of bits on a Layer 2 network transmitted to and fro from the same LAN devices. 

Few impressive technological stacks created include WhatSat, Lapps (Lightning Network Apps), Merkleized Abstract Syntax Trees (MAST), Taproot, Schnorr signatures, etc. 

Here’s what two of these technologies bring to the stack:

  1. WhatSat: It is a private system of messaging that sits on Lightning.
  2. Lapps: When it comes to consumer applications, Layer 2 has shown broad applicability, and Microsoft producing a decentralized ID system for Bitcoin is hugely revolutionary. 
  3. Taproot: Another system that is efficiently implementing the MAST structure, Taproot makes an entire application appear in the form of a Merkel Tree, where each branch represents a different outcome of execution.

Other technological changes visible in this segment are:

Covenants are another technological rise within Bitcoin technology. Technology can limit how one spends balances. Lending becomes comfortable with clawback-like policies in place.

Schnorr signatures from the performance and usability perspective created Scriptless Scripts that enable smart contracts in digital technologies for Bitcoins. Simplicity, Ivy, and Hivemind are some other technological leads for intelligent contracts.

Discreet Log Contracts can better protect privacy during the execution of contracts. 

Apart from all of these technological stacks, mining is another interesting domain where technologies have evolved rapidly.

Mining of Bitcoin

Mining protocols have also widely developed over the years. Although people often talk about centralization in Bitcoin mining, mining operators retain power structures that keep it decentralized in reality; some technologies are trying very hard to flip the power structure upside down. 

One of the technical leads in this aspect is the next version of Stratum V2. Stratum V2 would be implementing BetterHash, which would require an inflow of Bitcoin miners who are ready to make the switch over when successfully implemented. Reignited hash rates could also help immensely.

Privacy/ Security Structuring Around Bitcoin Technology

If you try to focus on transaction-graph privacy, you might often end up neglecting network-level privacy. If one is trying to focus on network-level privacy, you might miss the other way round; There is a lack of maturity and proper usage in both dimensions of privacy.

For transaction-graph privacy type P2EP, CheckTemplateVerify, and Conjoin are some of the solutions coming up slowly and being tested across various crypto networks. P2P communications have seen good progress with Dandelion’s protocol features and Erlay (responsible for increasing personal communication privacy).

Thus, a lot of changes seem to be occurring in different directions.

Final Thoughts

We can say that the evolution of Bitcoin technology has just scratched the tip of an iceberg; there’s more to what can be done with it in the future. However, it is essential to remember that a modular approach can bring success in the end. This is the only way to protect Bitcoin’s core properties and would also suitably guide the evolution of Bitcoin in the coming future. Apart from that, If you are willing to invest in Bitcoin to make a massive income from it, then the Bitcoin Era is the platform for you. It is a Bitcoin robot platform that focuses on making profit from Bitcoin.

Daniel Garza

Daniel Garza is well-known for his writing skills and works as a lead content writer in our team. He also has a deep interest in cryptocurrency funds and guides people on how to deal with a cryptocurrency exchange.

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