On January 3, 2009 Bitcoin was first mined by Satoshi Nakamoto. Since then the network has seen various upgrades to keep the network running at its peak efficiency.
How do upgrades work on the Bitcoin network
Bitcoin is an open-source network wherein any entity can suggest changes as per their wish. However, since the whole network is decentralized with no sole authority the community agreed on a mutual agreement wherein a Bitcoin Improved Proposal (BIP) is used by the community members to suggest various changes that can be instituted on the network.
After a particular proposal achieves a majority vote among the community the proposal is approved and the suggested changes are instituted on the network. The majority of the BIPs are passed by a core group of developers who are termed as ‘maintainers’. The sole job of a maintainer is to monitor as well as subsequently improve the overall Bitcoin network.
What is the recent upgrade instituted on the Bitcoin network?
Bug Fix to stop Fee sniping
- The bug fix was instituted improve privacy on the network and to use anti-fee sniping software into the system.
- Fee sniping is a practice wherein a miner mines the block with the sole intention of writing away the transaction fees. Free sniping is used by miners indulging in dishonesty to deem a previously mined block to be of higher value in transaction fees than what is currently owned by him in his memory pool.
- As subsidies on Bitcoin are diminishing slowly transaction fees will end up dominating the whole Bitcoin rewards ecosystem.
- The anti-fee sniping upgrades were instituted to curb the snipping malpractice. If this practice was left unchecked it would render the overall blockchain unusable. This would result in more miners indulging in sniping and no miner would be interested in extending the blockchain.
Apart from this Bitcoin had also instituted the Taproot upgrades which laid the foundation for DeFi services on the network. Apart from this various upgrades on the network are about to come.
Although upgrading the network does not affect the market price significantly however as the market grows these upgrades are instrumental in price rises.
Disclaimer: The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. It is only intended to provide education about the financial industry. Please do your own research.
Author - Govind R.