Subscribe To Our Newsletter

    Get the latest crypto news right into your email box. No spamming. We hate it too. Only pertinent news you need to know

    Latest News

    Coinbase Fixing Problem That Halted Payments From US Banks

    October 9, 2022

    Binance May Spend Over $1 Billion This Year on Deals, CZ Says

    October 9, 2022

    Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

    May 1, 2022
    Facebook Twitter Pinterest LinkedIn
    RareHippo – Crypto, Bitcoin, Blockchain News & Views
    Facebook Twitter Pinterest LinkedIn
    • Home
    • Bitcoin
    • NewsWire
      1. Latest News
      2. Top Stories
      3. Features
      4. What’s Hot
      5. Must Read
      6. Trending
      7. Spotlight
      8. Editors’ Picks
      9. View All

      Coinbase Fixing Problem That Halted Payments From US Banks

      October 9, 2022

      Binance May Spend Over $1 Billion This Year on Deals, CZ Says

      October 9, 2022

      El Salvador’s Companies Barely Bother With Bitcoin

      March 19, 2022

      New Jersey legislation aims to prevent public officials from being gifted NFTs

      March 18, 2022

      Coinbase Fixing Problem That Halted Payments From US Banks

      October 9, 2022

      Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

      May 1, 2022

      Crypto’s Preferred Currency for Political Donations Isn’t Bitcoin. It’s Dollars

      March 19, 2022

      Meta Sued by Australian Watchdog Over Scam Crypto Advertisements

      March 18, 2022

      Binance May Spend Over $1 Billion This Year on Deals, CZ Says

      October 9, 2022

      Two Senators propose crypto legislation for tax exemption on capital gains

      May 1, 2022

      Wall Street Reluctantly Embraces Crypto

      May 1, 2022

      Warren bill draws outcry over broad terms, but seems unlikely to pass

      March 20, 2022

      Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

      May 1, 2022

      Russia-Ukraine War Is Bringing Out the Good, Bad, & Ugly of Cryptocurrencies

      March 18, 2022

      The ‘world’s most advanced’ digital human wants you to buy her NFT art

      March 15, 2022

      FTX crypto exchange wins license in Dubai to open regional headquarters

      March 15, 2022

      Crypto Startup Founded by Ex-Meta Employees Raises $200 Million

      March 16, 2022

      U.K. Crime Agency Wants to Regulate Crypto Transaction Mixers

      March 15, 2022

      A Wall Street Quant Turns His Crypto Firm Into a Unicorn

      March 14, 2022

      Standard Chartered’s crypto custodian to help clients earn yield on token holdings

      March 14, 2022

      Man passing as UN affiliate convicted for crypto scheme

      March 18, 2022

      The Future of Crypto Is Boring — and Bright

      March 15, 2022

      Investors turn to crypto funds, companies as Russia-Ukraine crisis escalates

      March 15, 2022

      Binance Wins Crypto Licenses From Dubai, Bahrain

      March 15, 2022

      Why Bitcoin’s Environmental Problems Are So Hard to Fix

      March 16, 2022

      Americans Want Crypto From Their Banks

      March 15, 2022

      Why Decentralized Exchanges Are Important in the Crypto Economy

      March 10, 2022

      Binance plots M&A spree as regulators scrutinize crypto trading unit

      March 10, 2022

      Amid New Executive Order, White House Director Sheds Light On Crypto Policy

      March 16, 2022

      Bitcoin Evangelist Saylor Tells Economists Why They’re Wrong

      March 15, 2022

      Crypto Mania in Texas Risks New Costs and Strains on Shaky Grid

      March 15, 2022

      Bitcoin’s scared of commitment, Mr. Biden

      March 15, 2022

      Coinbase Fixing Problem That Halted Payments From US Banks

      October 9, 2022

      Binance May Spend Over $1 Billion This Year on Deals, CZ Says

      October 9, 2022

      Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

      May 1, 2022

      Two Senators propose crypto legislation for tax exemption on capital gains

      May 1, 2022
    • Altcoins
      • Ethereum
      • XRP-Ripple
      • Solana
      • Dogecoin
      • Cardano
      • Shiba Inu
    • Topics
      • Cryptocurrencies
      • Investments
      • Markets
      • NFTs
      • DeFi
      • ETFs
      • DAOs
      • Crypto Regulation
      • Metaverse
      • Blockchain & Web3
      • Blockchain Gaming
      • Crypto Exchanges
      • Crypto Mining
      • Stablecoins
      • Cybersecurity
      • Digital Currencies – CBDC
      • Crypto Book Reviews
      • Technology
      • Internet of Things
    • Opinions
    • Explainers
    • Press Releases

      Former Uber LatAm Head of Policy Leads Crypto Ride-Hailer Drife Toward Planned Global Expansion

      March 7, 2022

      European index provider for crypto assets Vinter raises $3.4m funding

      February 22, 2022

      PR – British crypto processor brings in $60 million for expansion in Europe

      January 25, 2022

      PR – CoinMENA obtains 2nd crypt0 license from European Union

      January 25, 2022

      NFT investment specialist looks to acquire Pluto Digital for £96m

      January 24, 2022
    RareHippo – Crypto, Bitcoin, Blockchain News & Views
    Home»Bitcoin»Bitcoin Isn’t Private – But Its Recent Taproot Upgrade Will Help
    Bitcoin

    Bitcoin Isn’t Private – But Its Recent Taproot Upgrade Will Help

    By Alyssa Hertig
    January 24, 2022By Coindesk6 Mins ReadNo Comments
    Facebook Twitter LinkedIn Pinterest Reddit WhatsApp Email Tumblr VKontakte Telegram
    Share
    Facebook Twitter Pinterest Reddit WhatsApp Email LinkedIn Tumblr Telegram

    Bitcoin is somewhat private – at least for users who know what they’re doing. But most people don’t.

    The network’s transaction data is fully public for anyone to view. Most people using Bitcoin might not realize that, because of the unique way Bitcoin works, their financial history is being recorded indelibly in a ledger that anyone in the world can pull up on their computer with ease.

    Donate to RareHippo Now!

    If Bitcoin users aren’t careful, their transaction history could potentially be exposed to the world. Not to mention, analytics companies like Chainalysis are dedicated to unearthing detailed information about where bitcoin is being sent and who owns which transactions.

    Behind the scenes, developers are crafting privacy updates in the hopes that users of Bitcoin can use the currency privately – without the extra thought or effort.

    The wide-reaching upgrade Taproot, which activated in November, brings a variety of improvements to the table. One important piece is boosting privacy.

    Taproot doesn’t fully solve Bitcoin’s privacy issues. But as we’ll see, it does pave the way for some substantial improvements.

    Disguising complex transactions

    In Bitcoin now, most transactions are simple: Just send bitcoin from one person’s wallet address to another. But there are also more complex transactions with more complex rules, such as multisignature transactions, which require two or more people to sign off on a transaction in order for it to go through.

    Then there’s the Lightning Network, a way to send faster and more scalable payments on Bitcoin, which is needed because Bitcoin’s on-chain capacity is limited. Opening and closing a Lightning channel creates a unique-looking transaction on the Bitcoin blockchain.

    At present, each of these complex types of transactions looks a little bit different from “normal” transactions. In Bitcoin’s completely public ledger, there are little technical details built into each transaction that make it possible to tell if someone made a multisignature transaction or a Lightning transaction.

    That’s where Taproot comes in. The privacy upgrade makes it possible to make more complex transactions exactly like normal transactions. All of these different transactions will look exactly the same.

    “By obfuscating the true nature of the transaction, it makes it possible for those smart contract transactions to hide amongst the ‘regular’ ones,” as Bitcoin mining company Braiins puts it.

    Hiding Lightning transactions in the crowd

    Lightning builds on top of multisignature transactions. To send bitcoin over the Lightning Network, a user needs to open a Lightning “channel.” Once they do, they can make as many transactions as they would like off-chain – potentially thousands – without touching the main Bitcoin blockchain. This process helps Bitcoin scale because there’s limited on-chain capacity.

    In this way, Lightning already boosts Bitcoin’s privacy because, unlike with on-chain transactions, none of the individual transactions between the opening transaction and the closing transaction are stored directly on the Bitcoin blockchain.

    But for now, each Lightning opening channel is a detectable on-chain transaction, which looks different from normal, simple transactions. Similarly, the final transaction a user makes when they want to close their channel shows up as a distinctly different type of transaction on the Bitcoin blockchain.

    Taproot hides these transactions from plain view. With Taproot, any transaction on the Bitcoin blockchain could conceivably be a Lightning open or close. But no one could possibly know for sure, thanks to Taproot’s cryptography.

    “So we’ll get into nice situation that many random [transactions] out there ‘could have been’ [Lightning Network] channels which actually transport coins off-chain, hugely boosting privacy even for people who don’t use [Lightning Network],” as Bitcoin privacy expert Chris Belcher tweeted in 2020, a year before Taproot activated.

    PTLCs: Disconnecting Lightning bounces

    As we described above, Taproot Lightning transactions can be hidden on-chain.

    But some off-chain entities can still see the payments. The Lightning Network is, as the name suggests, a network, composed of thousands of “routing nodes” connected together that help to “route” payments to their destination. Each Lightning payment bounces from one routing node to the next through channels, until it reaches the recipient.

    Each of these routing nodes can see a little bit about each payment that they route. Some of the information about the payment is already shielded to a degree – like where the payment came from.

    Currently, these payments are secured with so-called “Hash Time Locked Contracts (HTLCs),” smart contracts that ensure that the routing nodes in a payment’s path cannot steal a user’s payment (though they can receive a small fee for each payment that they route).

    Crypto news & Views

    With HTLCs, routing nodes can see the preimage. Because this preimage data is the same across all bounces in the payment path, it’s possible for spying routing nodes to figure out where a payment came from. Say a spy owns two routing nodes which detect two payments with the same preimage. Using that information, it can potentially guess the payment’s senders and receivers.

    Taproot opens the door to a HTLC replacement: Point Time Lock Contracts (PTLCs). PTLCs offer a way to undermine this kind of spying. Because each “payment point” looks different, unlike every HTLC preimage, it’s less easy to correlate each bounce in a payment route. As such, PTLCs offer better Lightning Network privacy.

    Better Bitcoin privacy still requires patience

    The bad news is that these types of indistinguishable transactions won’t suddenly be possible now that Taproot is activated, however. It’s exciting that Taproot transactions are now finally possible, but there’s still plenty of work to do. Most wallets allowing users to send and receive bitcoin transactions still need to upgrade their software to support Taproot.

    And for Lightning transactions in particular, each Lightning software implementation needs to add support for the new transaction type. Then, wallets do as well. This will take some time.

    Similarly, PTLCs aren’t a change that will be possible straight away. As with Taproot hiding complex transactions, there’s still a lot of development to be done to support PTLCs in each Lightning implementation.

    Not to mention, Taproot has one privacy problem in the short term: Taproot transactions look different from the transaction types that came before it. So far, only less than 1% of Bitcoin transactions support Taproot. So, Taproot transactions themselves stand out from the rest of the transactions.

    Still, if SegWit, Bitcoin’s previous upgrade, is any indication, the Taproot adoption will grow to become the standard over time.

    Taproot has finally activated after years of development, meaning a massive hurdle has been crossed in the path to these shiny privacy improvements.

    Read full story on Coindesk

    Bitcoin Blockchain & Web3
    Previous ArticleElon Musk faces losses on Bitcoin investments
    Next Article MicroStrategy Stock Falls After SEC Objects to Bitcoin Accounting

    Related Posts

    Coinbase Fixing Problem That Halted Payments From US Banks

    October 9, 20221 Min Read

    Binance May Spend Over $1 Billion This Year on Deals, CZ Says

    October 9, 20223 Mins Read

    Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

    May 1, 20224 Mins Read

    Two Senators propose crypto legislation for tax exemption on capital gains

    May 1, 20225 Mins Read

    Wall Street Reluctantly Embraces Crypto

    May 1, 20225 Mins Read

    Warren bill draws outcry over broad terms, but seems unlikely to pass

    March 20, 20225 Mins Read
    Add A Comment

    Comments are closed.

    Donate to RareHippo Now!
    Latest News

    Coinbase Fixing Problem That Halted Payments From US Banks

    October 9, 2022

    Binance May Spend Over $1 Billion This Year on Deals, CZ Says

    October 9, 2022

    Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

    May 1, 2022

    Two Senators propose crypto legislation for tax exemption on capital gains

    May 1, 2022

    Wall Street Reluctantly Embraces Crypto

    May 1, 2022
    Follow US & Win Prizes
    • Facebook
    • Twitter
    • LinkedIn
    • Pinterest
    Don't Miss
    DAOs

    Former Domino’s Pizza VP Joins FriesDAO as Advisor

    February 11, 20222 Mins Read

    Decentralized autonomous organizations come in all shapes, sizes, and tastes. Speaking of tastes, FriesDAO announced today that…

    Bitcoin prices likely to double over the next 12 months

    November 28, 2021

    Bitcoin holds steady below $50,000 in volatile weekend trading

    December 5, 2021

    Bitcoin May Soon Wake From Slumber, Derivatives Data Indicate

    January 18, 2022

    Subscribe to Our Newsletter

    Get the latest crypto news right into your email box. No spamming. We hate it too. Only pertinent news you need to know

    Crypto news & Views
    Facebook Twitter Pinterest LinkedIn
    • Home
    • Privacy Policy
    • About Us
    • Donate to RareHippo
    • Get In Touch
    • NewsWire
    © 2023 RareHippo. Powered by 8 Dimensions

    The content of this website is for informational purposes only and is not intended as a substitute for investment or financial advice.

    Type above and press Enter to search. Press Esc to cancel.