This week brought the publication of an important new Bitcoin Improvement Proposal (BIP). The sizable proposal packages three highly anticipated upgrades: Merkel Branches (or "MAST"), Schnorr Signatures, and Taproot scripting. If completed, accepted, and implemented, this BIP would be the most consequential upgrade to the Bitcoin network since SegWit went live in August 2017. In typical Bitcoin style, though, you can expect things to move forward cautiously. The upgrade will be done as a backwards compatible soft fork, and it likely won't be live on the Bitcoin mainnet for quite some time. Still, the publication of the BIP is an exciting step forward. Link.
Previous issues of this newsletter have touched on these proposals, but here's the gist: the combination of these technologies allow for significantly more complex logic to be embedded in Bitcoin transactions, while at the same time making those transactions more efficient and more private. For example, some Bitcoin could be locked with a script that has intricate, branching logic requiring specific multi-sig and time lock conditions be met before they're spent. Yet, in the normal case, MAST, Schnorr, and Taproot would allow that transaction to be processed without sending more data than a typical address-to-address spend, and without revealing the spending requirements to the rest of the network. If you find these properties intriguing, check out this approachable write up on the tech at Bitcoin Magazine. Link.
This week also saw a major milestone for the aggressive, almost-extravagant plans to upgrade the world's second largest crypto network. In particular, Prysmatic Labs, one of the teams building Ethereum 2.0, launched a public testnet for the "Phase 0" Beacon Chain. The testnet is limited to a single client implementation and comes with a number of other constraints, but it's still a landmark occasion on the road to ETH 2.0. At the time of this writing, the network was chugging along with over 1,000 validators. Link.
It's honestly hard to imagine a starker contrast between development roadmaps than the one we see between Bitcoin and Ethereum. It makes for a fascinating comparison.
This week, Bitcoin advanced-- slowly, steadily, and cautiously-- towards a soft fork that will make upgrades to its lowest level infrastructure. The upgrade makes modest but meaningful contributions towards security and privacy. It doesn't try to resolve every limitation of Bitcoin's architecture. It just makes Bitcoin a bit better at doing what it already does, and let's be clear: what it already does is pretty amazing.
In the same week, Ethereum took strides towards an upgrade that is not only not backwards compatible, it's not even a hardfork. It's a brand new chain! One with a brand new consensus algorithm! And if things go according to plan-- a "big if" to be sure-- that chain will one day coordinate 1,000 parallel shard chains capable of communicating with each other. It is a bid to scale laterally so as to reach the entire world.
Given the dramatically different approaches, it's not surprising members of the Bitcoin and Ethereum communities tend toward adversarial postures. Despite this, I genuinely appreciate both viewpoints, and I'm glad both networks exist. Let me tell you why.
For one, it's in no way clear which is more likely to work. It seems equally possible to me that Bitcoin will stagnate into niche irrelevance as it does that Ethereum will collapse under the weight of its technical complexity. I'm really glad we're running parallel experiments, because I'm really hoping at least one succeeds.
Beyond that, though, I think there's an under-appreciated possibility that both will flourish, and even end up complementing each other in a symbiotic way. For example, if Bitcoin becomes the ultimate digital gold-- a scarce, hard money, transacting on an incredibly stable network, with extremely high security guarantees, and maximal censorship resistance-- why couldn't Ethereum also thrive as the engine powering a decentralized financial ecosystem, fueled by ETH as a commodity money, and enabling entirely new kinds of systems powered by trust-minimized code? In such a world, Bitcoin could exist as an asset on the Ethereum network, and both would benefit for it. I see this as a very real prospect.
I have huge appreciation for both Bitcoin and Ethereum. While I understand why tension might exist between the communities, I think it's ultimately unfounded and unneeded. Both approaches can and should exist. They might just be the yin and yang combo we need.
50%. The fraction of transactions on the Bitcoin Cash network, in the past month, which originated from a single address. It's unclear if the transactions are simply spam used to inflate usage statistics, or indicate an entity trying to store arbitrary state on the blockchain. Either way, it's not a good look for the beleaguered BCH network. Link
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