Bitcoin blockchain: defeated challenges and foreseen the technical development | Simona Macellari | Blockchain Conf
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Bitcoin was created to fulfill Milton Friedman's vision of reliable e-cash that allows transfers from person A to B without either knowing the other. Key roots of Bitcoin are privacy, fungibility, and scalability. Technologies like the Lightning Network, Schnorr signatures, MAST, and Confidential Transactions improve privacy, scalability, and fungibility on Bitcoin. Innovation is ongoing to further these values and address problems like linking transactions.
Bitcoin blockchain: defeated challenges and foreseen the technical development | Simona Macellari | Blockchain Conf
- 1. BLOCKCHAIN & CRYPTO VALUES CONF | June 14 - Milan Back to the Roots of why Bitcoin was created to envision censorship-free environment driven by privacy-focused technologies Simona Macellari Director at BlockchainLab
- 3. In this presentation I’m going to talk about Bitcoin. Bitcoin is the only blockchain technology where significant and groundbreaking innovation is taking place. (just a couple of exceptions) Bitcoin has a concentration of minds working on it (the best minds). Premise
- 4. << I think that the Internet is going to be one of the major forces for reducing the role of government. The one thing that's missing, but that will soon be developed, is a reliable e-cash, a method whereby on the Internet you can transfer funds from A to B, without A knowing B or B knowing A. >> - Milton Friedman Roots
- 5. “Reliable e-cash” - Sound money: 21 million of bitcoins, no more -> no inflation - To be an “e-cash” it needs scalability “Without A knowing B or B knowing A” - Privacy: Transactions participants and amounts should be hidden - Fungibility: Every coin has to be indistinguishable to avoid targeted censorship Roots
- 6. - Scalability - Privacy - Fungibility Roots - Sound money Bitcoin Blockchain allows digital scarcity and anti double-spending through PoW with an inflation schedule Some important issues, but we can do better..
- 7. Problems: - Scalability: A worldwide broadcasted ledger (blockchain) does NOT scale (1 Megabyte block limit necessary to keep decentralisation) - Privacy: There is only pseudonymity, not anonymity. Amounts are clear. - Fungibility: Transactions can be linked together, possible to trace “dirty” bitcoins Roots
- 8. Timeline: technology to the rescue Late 2015 Segwit BIP141 proposal August 2017 Segwit activated Beginning 2018 Mainnet Lightning Network January 2016 Lightning Network Paper For the future: MAST Schnoor Confidential Transactions (?) Mimblewimble (?) and more..
- 9. Bitcoin Lightning Network ⚡️ Lightning Network is surely the most important revolution being developed and used on the Bitcoin network. Cutting -edge technology skyrocketing : instant micro bitcoin transactions, even in millisatoshi*: Bitcoin Lightning Network⚡️ *1 millisatoshi = 1 billionth of bitcoin
- 10. How does Lightning help with our problems? ● Only a limited number of transactions get broadcasted (opening and closing of channels) ● Transactions are known only between parties -> Onion routing for multi-hop payments This means: ● Off-chain transactions -> More possible transactions total (as on-chain throughput is limited) ● Private transactions -> Huge privacy and fungibility improvement (“chain- analysis” becomes less relevant, because things do not happen on the chain anymore) The beauty of Bitcoin without the Blockchain...
- 11. We should improve the chain as well ● Lightning was possible only thanks to a soft-fork: Segwit (transaction malleability fix) ● Schnoor Signatures ● MAST ● Confidential Transactions
- 12. Schnoor Signatures (soft-fork) ● Basic idea is about aggregating the signatures in a transaction ● Scalability improvement: 1 signatures instead of N broadcasted (less space used on-chain, more efficient) ● Privacy improvement: Multisig payments indistinguishable ● Privacy improvement: Allows for better CoinJoin
- 13. CoinJoin methods
- 14. CoinJoin methods ● Mixing transactions with other willing users ● Privacy improvement: Unable to related inputs to outputs if done on a decent scale WITH Schnoor: ● Scalability improvement too: Not only mixing transactions but also aggregating signatures -> Less space used on-chain Less fees for the users doing the CoinJoin Incentives to adopt.
- 15. MAST ● Allowing unused parts of Bitcoin scripts to remain hidden through Merkle Trees (Merklelized Abstract Syntax Trees)
- 16. MAST ● Scalability improvement: Allowing more complex scripts (“smart contracts”) with less data published on the blockchain ● Privacy improvement: Hiding all the unnecessary and not executed parts of your scripts (alternative clauses which could reveal information to third parties)
- 17. Taproot - Graftroot ● Problem: MAST Transactions would look different from normal ones ● Solution: Greg Maxwell’s Taproot (and then Graftroot) idea Annoyingly clever.. Do you remember when I said “concentration of minds?”
- 18. Confidential transactions ● Idea to improve privacy: Hide transactions amounts ● Transactions amounts can be hidden, only requirement is that inputs must match outputs and no inflation should be created. (Rangeproofs) ● Positive side: De-facto privacy fix. ● Negative side: Heavier requirements, less scalable ● Solutions: Off-chain Confidential transactions on side-chains (experimental idea, see Blockstream’s Liquid) ● Solutions: Bulletproofs dramatically improve rangeproofs confirmation times and space requirements. Idea already implemented on Monero (but with poor scalability). MimbleWimble could leverage CTs to improve scalability too (highly experimental).
- 19. Worth mentioning ● Scriptless scripts and Discreet Log Contracts: More private smart contracts. More private Lightning Channels ● Channel Factories: Possible extreme Lightning improvement ● Dandelion: Changing the way Bitcoin transactions are broadcasted to improve privacy against network-analysis attacks.
- 20. Innovation is coming The tech behind Bitcoin is always in constant evolution. Innovation is coming and it requires extreme dedication to stay up-to-date with the latest improvements. New groundbreaking ideas can come from a simple tweet.
- 22. I think that the Internet is going to be one of the major forces for reducing the role of government. The one thing that's missing, but that will soon be developed, is a reliable e-cash, a method whereby on the Internet you can transfer funds from A to B, without A knowing B or B knowing A. The Crypto Anarchist Manifesto by Tim May….A specter is haunting the modern world, the specter of crypto anarchy. Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact with each other in a totally anonymous manner. A Cypherpunk's Manifesto by Eric Hughes Privacy is necessary for an open society in the electronic age. Privacy is not secrecy. A private matter is something one doesn't want the whole world to know, but a secret matter is something one doesn't want anybody to know. Privacy is the power to selectively reveal oneself to the world. ROOTS WHY BITCOIN WAS CREATED