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Two common complaints about Bitcoin are the transaction times associated with its proof of work model for verifying and writing transactions, and its privacy issues.
But there are solutions and projects that provide ways to hold and transact the king of cryptos that are faster and more secure.
For transaction speeds, there are wallets that utilize Lightning Network, a project that boosts bitcoin transaction times. And for greater privacy, open source initiatives like Wasabi Wallet offer ways to transact that go beyond Bitcoin’s “pseudonymous” protocol.
The Lightning Network offers a solution to Bitcoin transaction time scalability and costs, by running a network where smart contracts operate to enforce trustless “Bidirectional Payment Channels.” According to its website:
“Two participants create a ledger entry on the blockchain which requires both participants to sign off on any spending of funds. Both parties create transactions which refund the ledger entry to their individual allocation, but do not broadcast them to the blockchain. They can update their individual allocations for the ledger entry by creating many transactions spending from the current ledger entry output. Only the most recent version is valid, which is enforced by blockchain-parsable smart-contract scripting. This entry can be closed out at any time by either party without any trust or custodianship by broadcasting the most recent version to the blockchain.”
Use of the Lightning network is not something end users have to worry about, other than using a Lightning Network enabled crypto wallet.
El Salvador’s recent rollout of Bitcoin to citizens as part of it’s acceptance of the crypto as legal tender, included offering the Lightning Network powered Chivo Wallet.
Other popular Lightning Network enabled bitcoin wallets include Breez, a non-custodial (meaning the user has full control of their crypto) open-source-code wallet, Zap, and Bitcoin Lightning Wallet (available on Android only).
Though the Lightning Network is relatively new, there are services already built which facilitate transactions with retailers, etc.. For example, Bitrefill enables purchasing from Amazon, Walmart, Ebay, Sam’s Club and thousands of other vendors.
Wasabi Wallet Means More Privacy For Bitcoin
For users who desire more privacy in their transactions, which use of traditional real world currencies like dollars can provide, there’s Wasabi Wallet.
An open source non-custodial wallet, Wasabi uses an innovative “Conjoin” process to effectively protect the privacy of transactions.
Conjoining is a mechanism that combines coins of multiple participants during transactions into larger transaction bundles, resulting in multiple inputs and outputs. According to Wasabi developers:
“An observer cannot determine which output belongs to which input, and neither can the participants themselves. This makes it difficult for outside parties to trace where a particular coin originated from and where it was sent to (as opposed to regular bitcoin transactions, where there is usually one sender and one receiver).
This can be done with non-custodial software like Wasabi that eliminates the risk of funds disappearing or being stolen. Each of the signatures are created on the participants’ computers, so anyone trying to connect the signatures is unable to alter the transaction or redirect the funds. The funds will always be in a Bitcoin address that you control.”
Conjoining is not automatically enabled, but is an option that can easily be chosen when initiating a transaction using the wallet.
To sum up, second-layer and other innovations adding value and features to cryptocurrencies is just one more part of a growing ecosystem in the blockchain sphere.