Bitcoin Roadmap: What’s Next for the World’s Leading Cryptocurrency?

With a market valuation of more than $1 trillion as of November 2023, bitcoin is the most popular and commonly used cryptocurrency in the world. It has revolutionized the way people transact value online, enabling fast, secure, and decentralized payments without intermediaries. But what is the future of Bitcoin? How will it evolve and adapt to the changing needs and challenges of its users and the broader society? In this blog post, we will explore the roadmap of Bitcoin, the main goals and milestones that the developers and community have set for the next years, and the potential implications and opportunities for investors, businesses, and consumers.

The roadmap of Bitcoin is not a fixed or official document, but rather a collective vision that emerges from the ongoing discussions and collaborations among the various stakeholders involved in the network. These include the core developers, who maintain and improve the software that runs the Bitcoin protocol; the miners, who secure the network and process transactions; the node operators, who validate and relay transactions; the wallet providers, who offer user-friendly interfaces and services; the exchanges, who facilitate trading and liquidity; the merchants, who accept Bitcoin as a form of payment; and of course, the users, who hold and use Bitcoin for various purposes.

The roadmap of Bitcoin is also influenced by external factors, such as technological innovations, regulatory developments, market trends, and social movements. These can create new challenges or opportunities for Bitcoin, requiring adjustments or innovations in its design or functionality. For example, the emergence of quantum computing could pose a threat to Bitcoin’s security, while the adoption of renewable energy could reduce its environmental impact.

The roadmap of Bitcoin can be divided into three main categories: scaling, privacy, and innovation. Each category represents a key aspect of Bitcoin’s performance and functionality that needs to be improved or enhanced to meet the growing demand and expectations of its users and society.

Scaling

Scaling refers to the ability of Bitcoin to handle a large number of transactions per second (TPS) without compromising its security or decentralization. Currently, Bitcoin can process about 7 TPS on average, which is far below the capacity of traditional payment systems like Visa or PayPal, which can handle thousands of TPS. This limits Bitcoin’s usability and adoption as a global payment system, especially for small-value or time-sensitive transactions.

The main challenge for scaling Bitcoin is that increasing its TPS would require increasing its block size, which is the amount of data that can be stored in each block of transactions that is updated to the blockchain every 10 minutes. However, increasing the block size would also increase the bandwidth and storage requirements for running a full node, which is a computer that validates and relays transactions on the network. This could reduce the number of full nodes on the network, making it more centralized and vulnerable to attacks or censorship.

To overcome this trade-off between scalability and decentralization, Bitcoin developers have proposed and implemented various solutions that aim to increase its TPS without increasing its block size. These include:

• Segregated Witness (SegWit): This is a protocol upgrade that was activated in 2017, which separates the signature data from the transaction data in each block, reducing its size and freeing up space for more transactions. SegWit also enables the use of second-layer solutions like Lightning Network.
• Lightning Network: This is a second-layer solution that operates on top of Bitcoin’s blockchain, allowing users to open payment channels with each other and exchange bitcoins instantly and cheaply without broadcasting every transaction to the network. Lightning Network can potentially handle millions of TPS, enabling micropayments and high-frequency transactions.
• Schnorr Signatures: This is a cryptographic scheme that allows multiple signatures to be aggregated into one signature, reducing the size and complexity of transactions that involve multiple inputs or outputs. Schnorr signatures also enable new features like Taproot and MuSig.
• Taproot: This is a protocol upgrade that is expected to be activated in 2022, which combines Schnorr signatures with a new scripting language called MAST (Merkelized Abstract Syntax Tree), allowing complex transactions to appear as simple ones on the blockchain. Taproot improves Bitcoin’s scalability by reducing transaction size and fees, as well as its privacy by hiding transaction details and participants.
• MuSig: This is a multi-signature scheme that uses Schnorr signatures to allow multiple parties to jointly create and spend bitcoins from a single address,
  without revealing their individual signatures or public keys. MuSig improves Bitcoin’s scalability by reducing transaction size and fees, as well as its privacy by enabling more efficient coinjoin transactions.

Privacy

Privacy refers to the ability of Bitcoin to protect the identity and activity of its users from unwanted surveillance or analysis. Currently, Bitcoin offers a basic level of privacy by using pseudonymous addresses that are not directly linked to real-world identities. However, this privacy is not absolute or guaranteed, as various techniques can be used to de-anonymize users or trace their transactions on the blockchain. These include network analysis, transaction graph analysis, address clustering, and chain analysis.

The main challenge for enhancing Bitcoin’s privacy is that increasing its anonymity would require decreasing its transparency, which is one of its core values and features. Transparency enables users to verify the validity and integrity of transactions and the supply of bitcoins, as well as to audit the network and detect fraud or corruption. It also enables users to hold each other accountable and enforce rules and contracts.

To balance this trade-off between privacy and transparency, Bitcoin developers have proposed and implemented various solutions that aim to increase its anonymity without compromising its verifiability. These include:

• CoinJoin: This is a technique that allows multiple users to combine their transactions into one, creating a single output that mixes their inputs and outputs. CoinJoin obscures the link between the sender and the receiver of each transaction, making it harder to trace or analyze.
• Confidential Transactions: This is a protocol upgrade that is being developed, which allows users to hide the amount of bitcoins that are being transferred in each transaction, while still allowing users to verify that no bitcoins are being created or destroyed. Confidential transactions improve Bitcoin’s privacy by preventing amount-based analysis or inference.
• Dandelion: This is a network upgrade that is being developed, which changes the way transactions are propagated and relayed on the network, making it harder to identify the origin or destination of each transaction. Dandelion improves Bitcoin’s privacy by preventing network-based analysis or inference.
• PayJoin: This is a technique that allows two users who are transacting with each other to exchange some of their inputs and outputs, creating a transaction that looks like a self-transfer. PayJoin improves Bitcoin’s privacy by breaking the common-input-ownership heuristic, which assumes that all inputs of a transaction belong to the same user.

Innovation

Innovation refers to the ability of Bitcoin to introduce new features and functionalities that enhance its utility and value proposition for its users and society. Currently, Bitcoin offers a basic set of features and functionalities that enable users to store and transfer value online, as well as to create and execute simple scripts or contracts. However, this set is not exhaustive or optimal, as there are many possible use cases and applications that Bitcoin could enable or support, such as decentralized identity, digital assets, smart contracts, oracle services, decentralized finance, and more.

The main challenge for innovating Bitcoin is that adding new features and functionalities would require changing its protocol or consensus rules, which is a complex and risky process that requires coordination and agreement among the various stakeholders involved in the network. Changing the protocol or consensus rules could also affect Bitcoin’s security or decentralization, as well as its compatibility or interoperability with other systems or protocols.

To overcome this challenge, Bitcoin developers have proposed and implemented various solutions that aim to increase its extensibility and adaptability without compromising its stability or compatibility. These include:

• Sidechains: These are separate blockchains that are pegged to Bitcoin’s blockchain, allowing users to transfer bitcoins between them at a fixed rate. Sidechains enable users to access different features and functionalities that are not available on Bitcoin’s main chain, such as faster transactions, lower fees, more privacy, or more programmability.
• Drivechains: These are a type of sidechain that are secured by Bitcoin’s miners, who vote on whether to accept or reject the transfers between them and the main chain. Drivechains enable users to access different features and functionalities that are not available on Bitcoin’s main chain, while still relying on Bitcoin’s security and consensus.
• Statechains: These are a type of sidechain that is secured by a federation of trusted entities, who act as custodians of the bitcoins that are transferred between them and the main chain. Statechains enable users to access different features and functionalities that are not available on Bitcoin’s main chain, such as instant transactions, zero fees, or more privacy.
• Rootstock (RSK): This is a smart contract platform that is built on top of Bitcoin’s blockchain, using a two-way peg and merge-mining. RSK enables users to create and execute complex scripts or contracts on Bitcoin’s network, using a Turing-complete language and a virtual machine.
• RGB: This is a protocol for issuing and managing digital assets on top of Bitcoin’s blockchain, using client-side validation and proof-of-publication. RGB enables users to create and transfer tokens that represent any kind of value or asset, such as stocks, bonds, commodities, collectibles, or NFTs.

Conclusion

Bitcoin is not a static or stagnant system, but rather a dynamic and evolving one. It has a roadmap that reflects its vision and values, as well as its challenges and opportunities. The roadmap of Bitcoin is not set in stone.