Earlier this year a team of researchers published a paper called:
The paper essentially outlines a method of allowing Bitcoin to adopt privacy features like Monero or Zcash, something that could make major waves in the cryptocurrency community.
At the moment Bitcoin is pseudonymous — while it’s not necessary to provide your name or personal information in order to send and receive Bitcoin, the blockchain keeps a record of all transactions and accounts, meaning that once an account is proven to be operated by an individual, their entire transaction history is viewable by anyone.
Confidential transactions have been explored by other projects and researchers but proved to be prohibitively expensive in terms of fees – before Bulletproofs. Combining Bulletproofs with a technology called Schnorr signatures, project Dandelion could give Bitcoin unprecedented privacy capabilities.
Bulletproofs on Bitcoin is going to be a Gamer changer! Untraceable transactions amounts 🙂 #Bitcoin
— Ameer Rosic (@AmeerRosic) December 3, 2018
If implemented, the technology could be revolutionary, empowering Bitcoin users to transact away from the prying eyes of governments and financial regulators and elevating Bitcoin to even greater heights as a tool to grant people financial freedom and independence.
Privacy capabilities would make Bitcoin truly fungible, a useful trait for money to have. Currently it’s possible to say what each bitcoin or fraction of a bitcoin has been used for in the past, which specific transactions, etc, meaning unlike currencies such as gold, each Bitcoin is not like the other – they are currently, to an extent, non-fungible, something that would be changed with privacy features masking the transaction history.
Of course, such a feature also has a strong use case for conducting illegal transactions, which could prompt government regulators to crack down on Bitcoin even after it has achieved a degree of acceptance as a commodity in many areas.
When Will Bitcoin be Private?
There are, in any case, a number of other obstacles standing in the way of adopting the new feature. First of all, the implementation would require a soft fork, which would require consensus among the notoriously contrarian and divided Bitcoin community which is populated with many bright minds with differing ideas on the direction of the cryptocurrency.
Second of all, it seems that quantum computers would theoretically be able to crack the proofs. While quantum computers are perhaps decades away from having any practical application and are in a highly experimental stage at the moment, the idea of eventually being able to go back years through the Bitcoin blockchain and demask anonymous transactions may be a dealbreaker for forward-thinking Bitcoin developers.
It’s possible that the features will never be fully implemented. While there will always be purists who don’t like to see Bitcoin develop features not outlined in the original Bitcoin whitepaper, many see privacy features as the next logical step in the evolution of a project that continues to add new features as more innovations are made in cryptocurrency technology. It may be the case that in a few years users will have the option of making a transaction public or private with a simple click of a button, making Bitcoin more user-friendly and secure at the same time.
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