Bitcoin Records Largest Mined Block to Date, 4 MB Block Containing NFT Causes Unease Among Small-Block Supporters

February 2, 2023 Bitcoin.com

Bitcoin SegWit adoption lags among major exchanges: Glassnode

February 4, 2022 Coin Telegraph

Binance

A Glassnode report reveals that cryptocurrency exchanges some major exchanges are still holding despite being heavy consumers of Bitcoin block space.

SegWit has come a long way since its first appearance during the 2015-2017 blocksize war. However, despite its relative success as a Bitcoin upgrade, crypto exchanges including Binance and Gemini are still not committed to using SegWit addresses for sending Bitcoin (BTC).

Implemented in 2017, segregated witness (SegWit) is a soft fork upgrade that separates “witness” data from the base transaction. In an “explain like I’m five” kind of way, SegWit allows for a safer and faster Bitcoin, making scaling the network easier.

While most exchanges and individuals were quick to upgrade their infrastructure to take on SegWit, reaching the 50% mark for Bitcoin transactions in 2019, the largest exchange, Binance has been dragging its feet.

Glassnode’s report states that Binance “had trivial SegWit adoption rates of only 10% up until the end of 2021.” However, it has finally “made an earnest effort to push SegWit adoption near the end of 2021.” Its adoption rate is currently at 50%, paling in comparison to Coinbase and FTX at 100%.

Altogether, crypto exchanges consume roughly 40% of Bitcoin block space. Crucially, however, Coinbase and Binance make up the lion’s share of block space, responsible for “25% of consumed block space” last month. If leaders such as Binance, or large players such as Gemini fail to fully adopt SegWit, Bitcoin will struggle to reach its true scaling potential.

Tomer Strolight, editor in chief at Swan Bitcoin, illustrates the argument:

“The fee savings provided by SegWit (and also batching and Taproot) will inevitably lead to their near-universal use. These have succeeded already in vastly reducing congestion and lowering fees. Ironically, however, their success to date means that we may have to wait until fees become a problem again to give the late adopters the kick in pants they need to fully switch."

Glassnode’s report also shares a more accurate measure for reading SegWit adoption, SegWit utilization. When applied to single entities, such as exchanges, it provides a more detailed picture.

Of the 18 major exchanges that Glassnode investigated, one-third are bona fide SegWit supporters at over 90% adoption levels. The second third–including Binance–are taking their best shot at adopting SegWit ranging from 50% to 80%, while the final six are still using Bitcoin addresses beginning with the number 1, rather than SegWit’s 3.

Here is the graph detailing the exchange SegWit ranking:

It’s unlikely that the laggard exchanges will upgrade to Taproot, the most recent Bitcoin soft fork, any time soon. As Strolight points out, we might have to wait until fees rise before they wake up.

BREAKING: The Bitcoin network welcomes Taproot soft fork upgrade

November 14, 2021 Coin Telegraph

Bitcoin mining

Taproot soft fork introduces the concept of Merkelized Abstract Syntax Tree (MAST) to improve the scripting capabilities and privacy of the Bitcoin network.

The Bitcoin (BTC) network successfully activated the Taproot soft fork following a 90% lock-in consensus from miners and mining pools between blocks 709,488 and 709,632. The milestone signifies the first major upgrade for Bitcoin since August 2017, which saw the launch of Bitcoin’s leading layer-two solution, the Lightning Network and Segregated Witness (SegWit).

The Taproot upgrade aims to improve the scripting capabilities and privacy of the Bitcoin network. To do this, the soft fork introduces the concept of Merkelized Abstract Syntax Tree (MAST). According to a Taproot-dedicated website run by prominent Bitcoin developer Hampus Sjöberg:

“[MAST] can help make smart contracts more efficient and private by only revealing the relevant parts of the contract when spending.”

Speaking to Cointelegraph, Sjöberg pointed out that Taproot activation shows that Bitcoin can do network upgrades again, which is extremely important for the longevity of the Bitcoin network. “I think that’s the greatest win,” he added.

Sjöberg, who is also a developer of a Bitcoin Lightning wallet Blixt Wallet, believes that the Taproot upgrade allows exploring off-chain capabilities, as to not put too much burden on the Bitcoin nodes of the network.

Taproot is a 100 years softfork.

Merging every contract and use-case under a single transaction type "Pay to Taproot" will in the long-run yield a more fungible and robust blockchain.

This is how you do it.
This is how you design a blockchain.
— Hampus Sjöberg ⚡ (@hampus_s) June 3, 2021

In addition, Sjöberg believes that MAST can also help improve the privacy of the older Lightning Network “if the Lightning implementations choose to adopt Taproot.” The developers of the various Lightning Network node implementations met in Zurich, Switzerland just a few weeks ago at the LN Summit 2021 to discuss possible upgrade paths:

“One of the things that were discussed in the meeting was whether it's best to upgrade Lightning in small iterations or do it as one big package.”

Moreover, Sjöberg explained how payment channels under normal circumstances can be made indistinguishable from normal transactions using Taproot for the Lightning Network:

“It's not possible to tell if a Taproot transaction is just a normal payment or if it belongs to a Lightning channel. This is important for the fungibility and thus the censorship resistance of Bitcoin.”

Taproot’s successful activation is attributed to Speedy Trial, a soft fork deployment method that requires 90% of the miners to signal the deployment of the upgrade. As explained by Sjöberg, “the signaling method works in periods of 2016 blocks, meaning that within a 2016 block period, 90%, or 1815 of the 2016 blocks have to signal for readiness.”

Back in June 2021, the Bitcoin miners achieved a 90% consensus for the first time and Sjöberg tweeted the announcement:

WE HAVE LOCK IN! #Bitcoin #Taproot

Video by: @TheGuySwann!https://t.co/rCUp5VNCBX pic.twitter.com/YFLMTenWW0
— Hampus Sjöberg ⚡ (@hampus_s) June 12, 2021

However, the Taproot upgrade also marks the end of Speedy Trial deployments and future upgrades to the Bitcoin network will require provision for new soft fork deployment methods. "Taproot opens a world of possibilities, but the first thing I personally would like to see is a "MuSig 2" transaction." Sharing advice for fellow Bitcoin developers, Sjöberg said:

“While we should not take anything for granted in Bitcoin, I personally would like to eventually see "Cross-Input Signature Aggregation" as a future soft fork for Bitcoin.”

In Bitcoin's near 13 years of existence, the Bitcoin network has undergone numerous community-driven hard and soft forks. While the Taproot upgrade is yet to prove its worth in time to come, the Lightning Network continues to attain new heights.

On Sept. 28, the Lightning Network witnessed a 160% increase in the number of nodes in the span of 12 months in addition to seeing a jump of 170% in the number of channels since January 2021.

As of Nov. 11, Bitcoin’s network capacity prior to Taproot soft fork was at an all-time high of 3,220 BTC, nearly worth $210 million.

Bitcoin soft fork days away as Taproot upgrade closes in

November 7, 2021 Coin Telegraph

Bitcoin mining

The Taproot upgrade was set for deployment after achieving a 90% consensus among the Bitcoin miners (mining nodes).

Real-world use cases are one of the main adoption drivers for every crypto ecosystem, which also holds true for the Bitcoin (BTC) network. In the next seven days, the Bitcoin protocol will undergo a soft fork in the name of Taproot upgrade, which aims to improve the network’s privacy, efficiency and smart contracts capability.

Taproot is Bitcoin’s first major upgrade since August 2017, which saw the introduction of Segregated Witness (SegWit) and resulted in the launch of Lightning Network. While the previous fork primarily sought to fix transaction malleability and improve Bitcoin’s network scalability, the Taproot upgrade aims to revamp transaction efficiency, privacy and support smart contracts initiatives.

The Taproot upgrade was set for deployment after achieving a 90% consensus among the Bitcoin miners (mining nodes). On the same day in June 2021, Bitcoin developer Hampus Sjöberg tweeted the announcement:

WE HAVE LOCK IN! #Bitcoin #Taproot

Video by: @TheGuySwann!https://t.co/rCUp5VNCBX pic.twitter.com/YFLMTenWW0
— Hampus Sjöberg ⚡ (@hampus_s) June 12, 2021

The Taproot soft fork will see the introduction of Merkelized Abstract Syntax Tree (MAST), which introduces a condition that allows the sender and receiver to sign off on a settlement transaction together.

In addition, Taproot will also implement Schnorr Signature, an algorithm that will allow users to aggregate multiple signatures into one for a single transaction, reducing the inherent visible difference between regular and multisig transactions.

Schnorr’s signature scheme can also be used to modify the user’s private and public keys, in a manner that can be verifiable to confirm the legitimacy of each transaction. According to the original Taproot proposal from January 2018 put forth by Gregory Maxwell:

“I believe this construction will allow the largest possible anonymity set for fixed party smart contracts by making them look like the simplest possible payments. It accomplishes this without any overhead in the common case, invoking any sketchy or impractical techniques, requiring extra rounds of interaction between contract participants, and without requiring the durable storage of other data.”

At the time of writing, Taproot.Watch, a website built by Sjöberg, shows that the Taproot upgrade will be activated on Nov. 14th after the successfully minting 1020 blocks.

Just last month, the Bitcoin network’s daily settlement value hit an all-time high after settling $31 billion worth of on-chain transactions.

Compared to the beginning of 2020, the network’s daily settlement volume has seen an increase of 40 times, supported by Bitcoin’s mainstream adoption in El Salvador and other jurisdictions.

There was $31 billion of value settled on the bitcoin network in a single day last week.

This is an all-time high for a single day of settlement value.

The global, decentralized payment system continues to become more dominant. (h/t @kerooke) pic.twitter.com/a6Q2FbPY3C
— Pomp (@APompliano) October 10, 2021

“[The Bitcoin network is] presently doing ~$190k per second. Compare this to $130k per second by Visa for US customers and $55k per second for Mastercard,” according to On-chain analyst Willy Woo.

Softfork