Bitcoin is constantly evolving, and the Bitcoin Core developers are always working on new ways to improve the network. In recent years, several BIPs (Bitcoin Improvement Proposals) have been activated that have had a significant impact on user privacy and security.
BIP 119 (SegWit)
Activated in August 2017, BIP 119 introduced Segregated Witness (SegWit), a soft fork that increased Bitcoin's block size limit and improved transaction scalability. SegWit also improved privacy by moving transaction signature data off the main blockchain, making it more difficult to track transactions.
BIP 32 (Hierarchical Deterministic Keys)
Activated in February 2018, BIP 32 allows for the creation of hierarchical deterministic (HD) wallets. HD wallets make it easier to manage and secure multiple Bitcoin addresses. Instead of having to generate a new address for each transaction, users can generate a single master key that can be used to derive an unlimited number of child addresses. This makes it more difficult for hackers to steal all of a user's Bitcoin if they gain access to one address.
BIP 90 (Schnorr Signatures)
Activated in November 2021, BIP 90 introduced Schnorr signatures, a new type of digital signature that is more efficient and secure than the previous signature scheme. Schnorr signatures are smaller than the previous signature scheme, which means that they can fit more transactions in a single block. They are also more secure, as they are resistant to certain types of attacks.
BIP 148 (SigHash SegWit)
Activated in August 2022, BIP 148 is a soft fork that improved the security of Bitcoin transactions by preventing replay attacks. Replay attacks are a type of attack in which an attacker can replay a previously signed transaction on a different network. BIP 148 made it impossible to replay SegWit transactions on the non-SegWit network.
BIP 341 (Taproot)
Activated in November 2022, BIP 341 introduced Taproot, a major upgrade that enhances Bitcoin's privacy, security, and scalability. Taproot allows users to create more complex transactions with multiple inputs and outputs, making it more difficult to track the flow of funds. It also allows users to create smart contracts that are more secure and private.
BIP 174 (Partially Signed Bitcoin Transactions (PSBT))
Activated in February 2023, BIP 174 introduced PSBTs, a new standard for partially signed Bitcoin transactions. PSBTs make it easier for multiple parties to collaborate on signing a transaction. This is useful for cases such as multi-signature wallets, where multiple people need to sign a transaction in order for it to be valid.
BIP 342 (Taproot Schnorr Signature Aggregation)
Activated in May 2023, BIP 342 enables the aggregation of Schnorr signatures. This further improves the scalability and privacy of Bitcoin transactions. By aggregating multiple Schnorr signatures into a single signature, transactions can be made smaller and more private.
Potential Future Updates
- BIP 114 (Optech): This BIP proposes a new opcode that would allow for more complex smart contracts on Bitcoin.
- BIP 101 (Stealth Addresses): This BIP proposes a new type of address that would make Bitcoin transactions more private.
- BIP 300 (Schnorr Multisignatures): This BIP proposes a new type of multisignature that would allow multiple parties to sign a transaction without revealing their individual keys.