💪Decoding Major Bitcoin Upgrades & Developments!

Welcome to Coinsauce's crypto newsletter! Our concise and informative content serves up educational alpha on all things blockchain, bitcoin, and crypto. Our mission is to educate the world 🌎️ and help the masses uncover the secrets of Bitcoin and blockchain! Whether you're looking to invest in Bitcoin or want to deepen your understanding of the technology behind it, you have come to the right place!

So get ready for a knowledge-packed ride to level up your crypto game! Today, we will talk about all the must-know Bitcoin upgrades and layer two developments in the recent past! 🌟💰

Introduction to BIP's 👌

In the crypto community, there's an ever-lasting, hotly contested debate around the survival of Bitcoin versus altcoins. While some firmly believe in the future of Bitcoin and its technical improvements, others think it's as outdated as their grandma's flip phone ☎️ 

What most people, however, are unaware of is the fact that Bitcoin core developers (often called maintainers) are constantly monitoring, improving and working on Bitcoin 😅 These core devs often propose changes to the Bitcoin network, known as Bitcoin Improvement Proposals (BIPs), which, if implemented, create a formal change to the network.

This group is highly decentralized (Unlike your favourite altcoin’s team ❌ ), and is funded by companies such as Square, Coinbase, Gemini, etc., to maintain Bitcoin’s open-source and secure network.  

Let's have a closer look at some of the BIPs and other developments implemented on the Bitcoin network over the past few years 👇

Segregated Witness (SegWit)

As suggested by Dr. Pieter Wuille, SegWit (BIP 141) was activated in August 2017. This upgrade modified the Bitcoin code and effectively increased the block size from 1MB to ~4MB, allowing for more transactions to be included in each Bitcoin block 🔝 

Segwit split 🪓 bitcoin transactions in 2 parts. The 1st part of a transaction contained the wallet addresses of the sender and receiver and the second part contained the “witness data” i.e transaction signatures. The upgrade removed the “witness data” from the main block, therefore reducing transaction size and enabling more transactions per block ❗️ This can be better understood with the image below 👇️ 

Another stated purpose of the upgrade was to protect against transaction malleability — the ability to change small pieces of information in a block.

All in all, Segwit enhanced bitcoin’s security, reduced transaction fees, and also made it more scalable than before 🚀 Moreover, its code also inspired the development of a Layer-2 solution: the Lightning Network (LN) ⚡️ , which we will discuss further in this newsletter.

For geeks, an in-depth and detailed explanation of SegWit can be found here!

Fun fact: Bitcoin Cash ($BCH) was created as a hard fork 🔱 , due to a lack of consensus among the Bitcoin community with regard to the implementation of Segwit!

Taproot

After SegWit in 2017, Bitcoin got its next major facelift 😄 with The Bitcoin Taproot update (BIP 341) on Nov 14, 2021. This time around, the upgrade was proposed by Mr Greg Maxwell. Taproot not only encouraged smart contract functionality on Bitcoin but also enhanced network privacy, security, and flexibility ❗️ 

The update allowed multiple signatures and transactions to be batched together, making verifying transactions on Bitcoin's network faster and more straightforward. One of the key benefits of Taproot was that it made complex transactions cheaper and more efficient 😅 

It also enhanced user privacy by using Schnorr signatures (BIP 340) to make the transaction details harder to analyze and trace back to their origin 🕵️ 

Unlike with SegWit, it looked like this time around, the miners were all on the same page with Taproot as they 'signed' off on the proposal without any 'hard fork' on the road! 😄

Lightning Network (LN)

Developed by Lightning Labs, the Lightning Network ⚡️ is a layer-2 solution built on top of Bitcoin, created to address the scalability issues of the blockchain. Initially proposed by Joseph Poon and Thaddeus Dryja in 2016, the LN uses micropayment channels to scale Bitcoin’s capability to handle transactions more efficiently and cheaply 👍️ 

Bitcoin’s current theoretical maximum TPS is a not-so-lightning 10. 🤦 Contrast this with traditional payment processors like VISA, which handle thousands of transactions a second, we realize the importance and need for the LN to achieve mass adoption of Bitcoin 😅 

LN addresses this problem by recording multiple transactions off-chain and then periodically settling them on the blockchain instead of recording every transaction on the blockchain directly.

The LN is especially useful when it comes to micro-payments. It can get frustrating really quick if you've to wait 10 minutes to pay for a cup of coffee ☕ using BTC. LN allows sending Bitcoin faster than a bolt of lightning and cheaper than a Happy Hour special! ⭐

The median cost of sending value across the Lightning Network is currently 0.0029%, i.e. 1,000 times cheaper than that of MasterCard or Visa payment processors 💥 ($0.84 to send 1 BTC, presently worth ~$28,800)

The working of the LN is very complex, and an interesting explanation of the same can be found here!

That’s it for Coinsauce’s educational alpha 🤘 Now that you're a Bitcoin pro, don’t forget to spread the knowledge to your friends and family, and even convince your grandma to HODL some $BTC 😂 Remember to follow us on social media for more knowledge drops. Until next time, happy HODLing!

Disclaimer: This newsletter is for educational purposes only and does not constitute financial advice or an offer to buy or sell assets. You must exercise caution and conduct your research before making any financial decisions.