\u201cWe also need to talk about it as a technology\u201d<\/p><\/blockquote>\n
\u201cBut we also need to talk about it as a technology. That\u2019s what bitcoin was originally, what it always will be, and what bitcoin as an asset class depends on.\u201d<\/p>\n
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Neha Narula<\/em><\/p>\n Narula was speaking on Monday at the Mainnet conference<\/a>, organised by Messari.<\/p>\n Asked to summarise current technological development in bitcoin, Narula said she saw four key areas of ongoing work.<\/p>\n \u201cThe first is privacy, which makes it harder to censor transactions,\u201d she said.<\/p>\n \u201cThen there\u2019s performance, which makes it easier to run a full node, making the network as whole more decentralised. Third, there\u2019s robustness\u2014making bitcoin harder to attack. And fourth, there\u2019s functionality,\u201d she said.<\/p>\n Narula said there\u2019s a key difference in design between bitcoin and most other cryptocurrencies.<\/p>\n \u201cWhat\u2019s driving a lot of the functionality changes [in bitcoin] is the need to minimise what goes onto the blockchain,\u201d she said.<\/p>\n The blockchain is bitcoin\u2019s transaction history<\/a>, which is visible to anyone.<\/p>\n \u201cThis is in stark contrast to a lot of the smart contract platforms, which execute every step of every contract on-chain,\u201d Narula said.<\/p>\n \u201cWe\u2019re building bitcoin to be around for centuries\u201d<\/p><\/blockquote>\n The minimalist aspect of bitcoin design is consistent with the network\u2019s goal of being widely used, said Narula.<\/p>\n \u201cA blockchain is replicated across thousands of nodes\u2014and hopefully one day millions, if not billions,\u201d she said.<\/p>\n \u201cIt\u2019s very expensive for storage, computing and memory usage to put a programme on-chain.\u201d<\/p>\n \u201cThe bitcoin base chain needs to be as simple as possible to support higher-level functionality,\u201d she said.<\/p>\n \u201cWe\u2019re building bitcoin to be around for centuries and you don\u2019t want to be constantly rewriting the base layer. And complexity is the enemy of security: if you have a very complicated protocol of functionality, that\u2019s a huge attack service. The whole point of this technology is to be secure. We\u2019re removing trusted third parties and relying on cryptography and software.\u201d<\/p>\n Narula went on to describe two upcoming changes to the cryptocurrency\u2019s software, proposed earlier this year as \u2018bitcoin improvement protocols\u2019<\/a> by developer Pieter Wuille. These proposed changes are called Schnorr and Taproot.<\/p>\n \u201cSchnorr is an upgrade to bitcoin\u2019s signature algorithm, with nice properties that help with privacy and performance. You can do things like aggregate signatures,\u201d explained Narula.<\/p>\n \u201cAnd Taproot is an upgrade to bitcoin\u2019s scripting system,\u201d she added.<\/p>\n \u201cIt\u2019s a really cool way of embedding smart contract functionality into transactions. Taproot transactions look like regular transactions. You can\u2019t even tell that there\u2019s some kind of complicated contingency happening.\u201d<\/p>\n However, Narula said the introduction of these changes would likely require at least the rest of 2020. The slow pace of revisions to bitcoin\u2019s software reflects the challenges of working on open-source projects, she explained.<\/p>\n \u201cPeople care a lot about robustness and doing good code review and making sure that this stuff is solid before it gets in,\u201d she said.<\/p>\n \u201cSoftware has bugs\u201d<\/p><\/blockquote>\n Narula added that mistakes have been made in programming the cryptocurrency in the past.<\/p>\n \u201cEveryone takes it for granted that because bitcoin\u2019s been working for the last ten years, it\u2019s all a done deal,\u201d said Narula.<\/p>\n \u201cWe forget we had an inflation bug in bitcoin for eighteen months. It\u2019s not something to be embarrassed about, it happens. Software has bugs.\u201d<\/p>\n In late 2018 bitcoin developers discovered\u2014and then fixed in secret<\/a>\u2014a software flaw which could have allowed an attacker to inflate the coin supply beyond its pre-programmed limit of 21 million coins.<\/p>\n For Narula, the interest in cryptocurrencies from the financial community doesn\u2019t always chime with what she sees as the technology\u2019s objectives.<\/p>\n Asked to comment on a recent critical report by investment bank Goldman Sachs<\/a> on the prospects for bitcoin, she offered a rallying call for the cryptocurrency\u2019s future as an inclusive project.<\/p>\n \u201cIf Goldman Sachs likes bitcoin, we\u2019re doing something wrong\u201d<\/p><\/blockquote>\n \u201cFor bitcoin, mainstream adoption doesn\u2019t mean institutional adoption, or replicating Wall Street all over again on top of a crypto network,\u201d she said.<\/p>\n \u201cIt doesn\u2019t mean a bunch of really wealthy people holding bitcoin as an asset to protect their wealth. Mainstream adoption means real, everyday people are actually using this network, whether that\u2019s holding their savings in bitcoin, using the Lightning network to make payments or building things on top of bitcoin.\u201d<\/p>\n \u201cIf Goldman Sachs likes [bitcoin], I think that means we\u2019re doing something wrong,\u201d she went on.<\/p>\n Narula aimed a barb at the head of another investment bank, JP Morgan, Jamie Dimon. In 2017 Dimon slated bitcoin, calling the cryptocurrency \u2018a fraud\u2019 and threatening to fire any employee using it<\/a>.<\/p>\n \u201cWe don\u2019t want Jamie Dimon saying, \u2018bitcoin\u2019s great\u2019,\u201d Narula said.<\/p>\n \u201cI understand people might want the number [bitcoin price] to go up, but you\u2019ve got to be in this for the long term. You have to think about what this really is and what kind of value it has. It\u2019s not just about pumping up an asset.\u201d<\/p>\n Instead, suggested Narula, those participating in the network must accept they are involved in a collaborative project.<\/p>\n \u201cInstitutions realise that if they are building their business on this technology, they have to contribute,\u201d she said.<\/p>\n \u201cIf you\u2019re building on open-source technology, you need to give something back to make sure it\u2019s robust. It\u2019s even more important with something like cryptocurrency, where there\u2019s now lots of money based on bitcoin continuing.\u201d<\/p>\n \u201cThere are only a few institutions actually doing the work\u201d<\/p><\/blockquote>\n Narula finished with a warning about bitcoin governance.<\/p>\n Other cryptocurrency projects have raised money from initial token sales (or \u2018pre-mines\u2019) to fund their further development, said Narula, but this is not the case with bitcoin, she said.<\/p>\n Bitcoin ran for years at the outset with its tokens having little monetary value.<\/p>\n Instead, she said, the leading cryptocurrency faces its own, unique development challenges.<\/p>\n \u201cWhen I see developers wanting to work on bitcoin core [software] and trying to find funding year-to-year to do that, that\u2019s a really scary situation,\u201d she said.<\/p>\n \u201cInstitutional investors are not going to be really comfortable investing in a technology that doesn\u2019t have its act together. There\u2019s no token sale [to fund development] and there\u2019s no foundation. There\u2019s no central body with hundreds of millions of dollars to support bitcoin. There are only a few institutions actually doing the work and putting in the effort.\u201d<\/p>\n According to research published earlier this year by cryptocurrency exchange BitMEX<\/a>, the main contributors to bitcoin software development are Blockstream and Lightning Labs, which both employ eight developers, followed by Square Crypto, which employs seven.<\/p>\n MIT\u2019s Digital Currency Initiative (DCI), which Narula heads, has 6 developers dedicated to bitcoin, as do Chaincode and Purse.<\/p>\n