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Bulletproof Bitcoin? Maybe Not Yet

With all the hubbub around the institutionalization of crypto and the stablecoin mania of the past two weeks, we have not really had a chance to write about a topic that is close to our hearts – the technical challenges faced by top crypto projects and the solutions being developed by a developer community who are mostly driven by ideologies and could not really care less about daily price movements.

Last week, Monero made some important upgrades to the protocol by activating “Bulletproofs,” which significantly reduced the transaction sizes and saw fees on the network fall by more than 95%.

XMR transaction size in KB

“Bulletproofs” were first introduced by a team of researchers at Stanford to improve the confidentiality of private transactions and also simultaneously reduce transaction size. The developer community was eagerly awaiting this upgrade because the Bitcoin core community is also contemplating using “bulletproofs” to improve the confidentiality of transactions.

However, Bitcoin faces a wider array of challenges as compared to Monero when it comes to integrating Bulletproofs into the protocol because of the 1MB block size limit in the case of Bitcoin. Monero does not face any block size constraints as the blocks are dynamically adjustable in terms of size. A lot of folks might wonder- why can’t we just add privacy to the Bitcoin protocol and make it more secrecy-friendly. However, making changes and adding new features to the Bitcoin protocol is not as easy as one might assume because of Bitcoin’s constraints around block sizes. A lot of other protocols do not have any block size limits or do not have enough economic activity to hit the block size cap or have the ability to conveniently keep increasing block size to accommodate more transactions, which of course inevitably leads to higher costs of running a node and therefore more centralization. For example, “Bulletproofs” will increase the average transaction size of a Bitcoin transaction by 3x, which is something that is impossible to implement when there is a concerted focus on reducing the transaction size to improve scalability.

As some readers might wonder, how could “bulletproofs” possibly decrease Monero’s transaction size by more than 80%, but increase Bitcoin’s transaction size by 3x? Before “bulletproofs” an average Monero transaction was 30x larger than Bitcoin’s and now it is 3-5x larger. Installing bulletproofs dramatically reduced the size of proofs, which are important for confidential transactions. Bitcoin’s transactions do not have any associated proofs with them as they are not confidential. To improve privacy, the trade-off would be that Bitcoin transactions will have to be bigger in size.

Meanwhile in Crypto Wonderland….

“Flood Relief Through Cryptocurrencies” Binance has released a report on crypto donations to provide relief for West Japan following devastating floods in mid-July. Record downpours in Japan caused floods and landslides, affecting over 8 million people. Binance subsequently called for donations in digital currency from individuals and industry players to help residents affected. Per the post, the exchange managed to raise $1.41 million in various types of ERC20 tokens.

“Green Calls 50x Growth in Crypto” In a press release issued by DeVere Group, the finance-centric consultancy company, which brought attention to Bitcoin’s upcoming 10th anniversary, CEO Nigel Green claimed that the iron grip of Bitcoin will only be loosened over the next decade. Green still expressed that the collective market capitalization of crypto assets will swell by “at least” 5000% in the next 10 years.

“Demonstrating Weak Chain Security” On Saturday, a crypto enthusiast and security researcher going by the handle “geocold51,” live-streamed his attempt to 51% attack Bitcoin Private, a crypto with close to a $47 million market cap. Geocold51 claims that he wasn’t interested in stealing, and so he set up the demonstration where he’d send the bitcoin private he owned to two different wallets he owned so that no user or exchange provider gets ripped off.

“Binance Uganda Goes Live” The world’s largest crypto exchange Binance has launched its fiat-to-crypto exchange in Uganda today. Binance Uganda, Binance’s first fiat-to-crypto exchange in Uganda, has officially launched live trading, enabling users to buy two major cryptocurrencies — Bitcoin (BTC) and Ethereum (ETH) — with local fiat currency Ugandan shillings (UGX). The exchange had announced last week that Binance Uganda would open this week.

“JVCEA Given Self-Regulatory Green Chit”Japan’s  financial watchdog has granted a self-regulatory status to the crypto industry, allowing the Japan Virtual Currency Exchange Association (JVCEA) to bring new rules for Japanese crypto exchanges, as well as to sanction those that fail to comply. The move marks a new approach to dealing with risks associated with attacks such as those seen on Japan’s exchanges earlier this year, as well as other issues, such as money laundering.

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Basis: A Stable, Scalable Cryptocurrency featuring Nader Al-Naji

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