We’re already starting to see the seeds of second layer potential develop from the base layer primitives that have been added or optimized in the first decade. LightningAlthough still limited in some ways, it is beginning to grow. And This is the first limited version of the product that has been specified. There There are many types of side chains deployed. LiquidRSKs and token chains that are linked to Bitcoin Developed by Commerceblock. This This is only the beginning.
Schnorr You can also find out more about the following: Taproot
Just The combination of Schnorr You can also find out more about the following: Taproot. On The following are some of the ways to get in touch with us. Schnorr This is the most cost-effective way to check signatures. It’s also the next step in the optimization of the multi-signature construct. Bitcoin. Multisig The initial idea was to just include the script and public key for the Multisig as part of the transaction output and then add it to the input when spending it. P2SH optimised the output by including a hash constant of all the public keys, scripts, and addresses of the multisig. This saved fees to anyone who sent to the address, and left an increase in cost for only the sender. SegWit arguably “optimized” further by making spending multisig UTXOs cheaper with the witness discount. Schnorr This extreme optimization takes incremental optimization to its extreme. You Combine the different public keys and make one key that everyone can use to sign a document. This Multisig creates huge cost savings when used in conjunction with second layer technologies, such as Lightning It also creates a benefit for privacy by making multisig UTXOs undistinguishable.
Now that doesn’t just magically make everything completely private. Lightning To react to the submission of an old state, channel states still need separate key pathways for their penalties transactions. That This means that the scripts must be included in order to create a fingerprint. Taproot The crypto-magic of the program allows for the creation of an merkle tree with multiple spending conditions. All that is required to do this is the condition to use and the merkle proof. Schnorr Public key Now You can use taproot to hide the penalty script. You You can easily hide conditional code paths with TaprootUnder a normal-looking surface, there is a hidden secret. Schnorr Key that enables all participants to come together and agree on something, resulting in a transaction with a normal appearance.
SIGHASH_ANYPREVOUTPUT
SIGHASH_ANYPREVOUTPUT (previously SIGHASH_NOINPUT) is hopefully the next new primitive to come down the pipeline. It There is a public key format/sighash upgrade. Sighash The flags on a signature indicate the parts of an agreement that it is signing. This There is functionality that allows you to sign only your inputs and out puts but still allow others to input their inputs and produce outputs without invalidating the transaction. But A signature is required to confirm an agreement. You can find out more about it here. UTXO from a You can find out more about it here. transaction. SIGHASH_ANYPREVOUT would, amongst other things, enable committing a sign to only a UTXO Script, and not an actual UTXO. This This allows for a different way to build. Lightning The channel state does not require the penalty key, and it deals with the old states in a way that allows the party who has been cheated to keep all their money. InsteadThe current state of the channel would simply spend the previous channel state in the event it had lost the race. This ensured that all users got their current balances on the chain, rather than an old balance. You Use SIGHASH_ANYPREVOUT to rewrite the script.
This This eliminates many risks of you losing your current channel state resulting in an unintentional penalty transaction that takes all your money. It Also, it enables MUCH MORE. Now We can all have Lightning channels with more than 2 participants, and can even stack “sub-channels” on top of those. AlsoSIGHASH_ANYPREVOUT, eltoo allows the creation of StatechainsThe federation is an example of a channel construction that allows for new participants entering and leaving completely off the chain, on the basis that it will not conspire with previous participants in order to cheat anyone. This opens a lot of potential for what I’ve been calling to myself “multi-party static UTXO protocols.”
OP_CHECKTEMPLATEVERIFY
OP_CTV was created by Jeremy Rubin to enable a very basic type of “covenant” on Bitcoin. The covenant is a more complex restriction on spending money beyond the signatures of certain keys. The The type of contract Rubin’s proposal would implement is a “template.” Essentially, this allows a UTXO’s script to require specific exact outputs to be created by the spending transaction. So once a UTXO is created using OP_CTV, it is enforced by consensus that the UTXO has to be spent to specific addresses in the specific amounts defined in that UTXO’s script. You You can chain them together, so one of the UTXOs has to produce a couple more. Then, they are forced to create a couple more.
This It is a general concept that can be applied anywhere. In In high-fee environments, a single UTXO may be produced by a custodial agency that 100 percent by consensus guarantees all of their customers funds will wind up under their customers control, even though they don’t have immediate access to them in the moment. This has a lot of potential synergy with multi-party channels (channel factories), in that a mass “withdrawal” done like this can also simultaneously create and be used as a channel factory. OP_CTV allows you to build payment channels which are unidirectional and do not require the receiver to be online or to have a password to accept payments. It The same technique used in the first example of custodial withdrawals can be applied to bundle HTLCs together to enable a channel to handle more at once. And It could even lead to the creation of new coinjoints.
Putting Everything Together
Assuming All the proposals above are accepted and incorporated into Bitcoin, I really think that aside from the developers actually working on the leading edge of these things, people don’t even have the faintest clue what types of protocols and services will be built using these primitives. Or There are some strange things that happen when there’s no obvious line between protocol or service.
They This will allow multi-party channel stacking with sub-channels that are smaller groups of base participants. Channels can be built on top of these “channel factories” that allow people to receive money without having keys online for a hot wallet. These The multi-party channel can be placed on top of the federated channel (statechain) to allow for participants to exit or enter with no activity on chain! And the construct of channel “splicing” will allow liquidity to move relatively seamlessly between different channels in ways that will enable all kinds of things people haven’t even really began thinking about.
My Last word: This is only a consideration of what I think directly relates to the Bitcoin Protocol stack by itself You You can achieve a great deal more by focusing on centralized services. What subsets of Bitcoin’s properties those can provide ignoring regulatory or legal barriers from doing so.
This Just a few words to describe what you are looking for Part The next installment will be posted tomorrow.
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