5 Bitcoin Network Developments You Should Know

Bitcoin technology has evolved significantly since its inception. Bitcoin is continually evolving as the community strives to improve privacy and scalability. The original bitcoin client, Bitcoin Core, is currently at version 23.0, which indicates a lot has been happening behind the scenes – there were 37 githubs in total releases at the time of writing.

Read on to learn about five Bitcoin technology developments geared towards helping Bitcoin reach its full potential.

The most important developments in Bitcoin technology that you should know

Over the years, many Bitcoin Improvement Proposals (BIPs) have been submitted to the community, suggesting various ways to improve the network. Some were approved and implemented while others were rejected. Bitcoin Core developers and more than 800 contributors participate in the Bitcoin development process.

Here is a list of the top five bitcoin technology improvements you should know about.


Segregated Witness (SegWit) is a Bitcoin upgrade implemented through a soft fork in August 2017. It addresses the malleability of transactions and increases the validation rate by storing more transactions in a block. SegWit paved the way for the Lightning Network and the Taproot upgrade.

SegWit was proposed by Bitcoin developer Peter Wuille in 2015. The SegWit upgrade sparked a “war” within the bitcoin community before it was even activated. Community members opposed to this change forked the Bitcoin blockchain to establish Bitcoin Cash (BCH).

SegWit takes the “witness data” out of a block, minimizing transaction size and freeing up space within a block. Therefore, post-SegWit blocks can hold around 2,700 transactions, as opposed to an estimated 1,650 transactions before the upgrade. Witness data is the second part of a transaction that includes transaction signatures. The first part of the transaction contains the wallet addresses of the sender and recipient.

SegWit also fixed transaction malleability, a term that refers to the ability for part of a transaction to be modified “after a transaction has been signed without invalidating the signature.” The second phase of this upgrade, SegWit2x, was not initiated because it was rejected. The goal of SegWit2x was to increase the block size to 2 MB. SegWit adoption surged in 2021 and has been steadily increasing ever since. At the time of writing, SegWit assumption at the transaction level was 84%.

The Lightning Network

The Lightning Network (LN) is a Layer 2 payment protocol built on top of the Bitcoin blockchain. It was proposed by researchers Thaddeus Dryja and Joseph Poon in 2015. Their paper was based on Satoshi Nakamoto’s ideas on payment channels and the forum discussions he held about them. In 2016, Dryja and Poon formed Lightning Labs, a company that would focus on developing LN. They released the beta version of LN in 2018.

The Lightning Network uses smart contract capabilities that allow users to perform instant off-chain microtransactions. Payments take place within payment channels (multi-signature contracts), allowing two parties to do business with each other. LN offers remarkably low fees because transactions and settlements happen off-chain. It can potentially handle billions of transactions per second, solving Bitcoin’s scalability problem.

However, the Lightning Network is not perfect. It has problems that are continuously being solved. Some of the solutions in the works are Route Blinding and Trampoline Onion Routing. Route blinding, for example, aims to improve recipient privacy.

LN’s capacity has grown in 2022 despite the bear market. It surpassed 5,000 BTC in October 2022. This is the cumulative capacity that all LN nodes hold. Companies are also investing a lot of money in the Lightning Network. For example, Strike, an LN digital payment provider, raised $80 million in a fundraising round led by Ten31.

Source: Check out Bitcoin


Taproot is a Bitcoin upgrade that was deployed via a soft fork in November 2021. It improves privacy, reduces fees, improves smart contract functionality, and makes bitcoin transactions cheaper, more efficient, and more private. Taproot was proposed by software developer Gregory Maxwell in 2018.

The upgrade allows multisig transactions – transactions that require two or more parties to sign out – to be consolidated and verified. This increases the time it takes to validate complex multisig transactions, which were notoriously slow prior to the implementation of Taproot.

Also, the Taproot upgrade benefits Lightning users by reducing network congestion on the Bitcoin base layer. LN transactions are verified on the Bitcoin blockchain, which can cause congestion. However, with Taproot, the Lightning Network becomes more efficient in processing transactions.

Taproot provides privacy because it can disguise multisig transactions as single-signature transactions. This makes it difficult to identify the parties involved on the blockchain. Using Taproot is optional, which means its acceptance will gradually increase. As of this writing, it was only about 1% of all Bitcoin transactions use taproot.

The liquid network

The Liquid Network is a bitcoin sidechain that facilitates private bitcoin transactions targeting major counterparties in the bitcoin ecosystem. It also allows settlement and issuance of stablecoins, security tokens, and other financial assets on a sidechain tied to Bitcoin’s blockchain. Blockstream is the company behind the Liquid Network, which went live in 2018.

An association of distributed members operates Liquid. These members range from exchanges and financial institutions to bitcoin-focused companies. Some of the members listed on the Liquid website are Xapo, Wyre, Bitfinex, CoinShares, Huobi, Ledger, and Paymium.

Users pair BTC to redeem for L-BTC (which is backed by BTC at a 1:1 ratio), allowing them to conduct confidential transactions and benefit from faster transaction speeds and low fees. Unfortunately, the low adoption of the network reduces the effectiveness of the privacy feature, since it is practically not used by crowds. Also, the federated model is somewhat centralized, giving the Liquid Network a set of trust assumptions that differ from Bitcoin.


Federated Mint (FediMint) is a Bitcoin sidechain that solves the privacy and custody issues associated with Bitcoin.

Privacy is minimal as Bitcoin transactions are visible to everyone and most people still store their BTC on third parties like exchanges, putting their funds at risk. The open-source FediMint protocol solves both of these challenges by providing data protection and a lower-risk custody solution.

It uses the Byzantine Fault Tolerant (BFT) consensus algorithm for security purposes, and the trust is shared among multiple parties in a federated mint. When users send BTC to these mints, they receive Ecash tokens. You can then privately send the tokens to other users within the coin, as other members will not know which parties are doing business with each other.

FediMint allows users to place Federated Mints in custody over their BTC. They can do this by trusting certain members of the coin to act as guardians. The role of guardians is to provide custody services through FediMint servers.

The development of FediMint is still ongoing. The project was supported by Ten31, Blockstream, Spiral and the Human Rights Foundation. FediMint is interoperable with the Lightning Network.

FediMint data protection can be improved by the Flexible Round Optimized Schnorr Threshold (FROST). This is a new type of multisig that provides privacy while making federations more flexible. It was launched in 2020 paper by Chelsea Komlo and Ian Goldberg.

The Bitcoin technology developments discussed above could greatly expand the potential of Bitcoin and thereby make the cryptocurrency more useful in the near future. The developments are also a reminder to Bitcoin newbies that there is more to this project than just buying and holding coins for potential profit.

Bitcoin developers are working to build solid money that anyone around the world can access and use digitally without censorship or bureaucratic barriers to entry.


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