WHAT IS A BITCOIN IMPROVEMENT PROPOSAL (BIP)?
Bitcoin Improvement Proposals, or BIPs, are the standards by which changes to the Bitcoin protocol are recommended. They can include very significant protocol changes — including updates that require soft forks or hard forks — or changes to software implementations or the BIP process itself.
BIPs were introduced by early Bitcoin developer Amir Taaki, originally based on the process used for improving the programming language Python. Taaki submitted the first BIP in 2011.
To read more about the history of BIPs and how they lead to changes in Bitcoin, check out our guide on the process.
BITCOIN LAYER TWO
Periods of very high network activity on Bitcoin do not allow for practical uses such as buying coffee or transacting in small amounts due to the high transaction fees that come with high network usage. Solutions to this problem have come in the form of second-layer technologies, like Lightning. Lightning is a layer built on top of Bitcoin that allows for near-instant micropayments by settling transactions off-chain.
As a second layer scaling solution to Bitcoin, Lightning is computer code which gives you a mathematical guarantee to claim the funds being transacted with. The Lightning Network is perhaps the most promising (but not the only) second-layer technology being developed that will make this possible. Certainly, there will be many more use cases we may not have even imagined yet.
WHAT IS THE LIGHTNING NETWORK?
The Lightning Network is arguably the most popular and well-developed “layer two” protocol for Bitcoin, designed to facilitate faster, cheaper and more private payments. In essence, the Lighting Network exists on top of Bitcoin, creating channels for payments that are not recorded on the Bitcoin blockchain (and can thus be facilitated much more quickly and for smaller fees).
Funding these channels or closing the transactions in them does require recording on the blockchain, thus utilizing the network’s robust double-spend protection.
To read more about how this layer two solution visit our Lightning Network guide.
QUANTUM COMPUTING AS A THREAT TO BITCOIN
The concept of quantum computing stems from the 1980s and in recent years, quantum computers that can solve problems that are out of reach for standard computers have emerged. Some have suggested that a quantum computer would be strong enough to threaten Bitcoin, by becoming strong enough to break public-key cryptography, dominate the mining landscape or otherwise change the dynamics of computing such that Bitcoin is no longer able to function the way it was designed.
Among the threats that Bitcoin faces, quantum computing is one that has not developed far enough yet to truly test the technology. But it appears that Bitcoin could be adapted to exist effectively alongside more powerful quantum computers if necessary.
To read more about what the growth of quantum computing could mean for Bitcoin, read our guide.