Bitcoin Gets Upgrade, But Vulnerabilities Still Exist

Bitcoin Upgrade

The first Bitcoin upgrade in four years has just gone live. It’s a rare moment of consensus among stakeholders, and it’s a big deal for the world’s most popular cryptocurrency.

With the Taproot update to Bitcoin effective on 14 November 2021, the first significant upgrade to the blockchain network since August 2017, there have been many claims in the media that it increases Bitcoin’s scalability, security and privacy.  Dr. Mohiuddin Ahmed, lecturer of Computing and Security discipline in the School of Science at Edith Cowan University, says many of these claims are questionable.

What’s changing?

Much of the metamorphosis of bitcoin has to do with digital signatures, which are like the fingerprint that an individual leaves with every transaction.

Taproot will add something called Schnorr signatures, which will make transactions with multiple signatures essentially illegible, according to Bitcoin miner Alejandro De La Torre.

This will not result in more anonymity for your individual Bitcoin address on the public blockchain, but it will make simple transactions indistinguishable from more complex and multi-signature transactions.

In practice, this means more privacy, because your keys won’t have that much visibility in the chain. “You can kind of hide who you are a little better, which is good,” said Bitcoin mining engineer Brandon Arvanagi, who now runs Meow, a company that allows corporate treasury to participate in the cryptocurrency markets.

Right now, the cryptocurrency uses something called the ‘Elliptical Curve Digital Signature Algorithm’, which creates a signature from the private key that controls a bitcoin wallet and ensures that bitcoin can only be spent by the rightful owner.

“The upgrade is more concerned with efficiency but not securitySmart contracts are nothing but computer programs that need to be included in blockchain for automated execution. However, malicious smart contracts or tampered contracts can still jeopardise the entire blockchain due to immutability. If the cyber criminals can tamper with the smart contracts, the new Taproot upgrade will not be beneficial at all,” said Dr Ahmed

It is not wise to expect changes overnight due to the new upgrade. It will take a considerable amount of time to keep everyone in the bitcoin ecosystem on the same page. However, the key change is in the digital signature.

Earlier, the bitcoin used Elliptic Curve Digital Signature Algorithm or ECDSA which is computationally expensive and has an impact on the scalability of bitcoin transactions. The new upgrade incorporates “Schnorr Signatures” which intends to enhance security, privacy, and scalability, in a nutshell, more efficiency. And this may attract some more investors. 

However, from a security perspective, if we take a 360-degree view, Smart contracts are nothing but computer programs that need to be included in blockchain for automated execution, however, malicious smart contracts or tampered contracts will jeopardise the entire blockchain due to immutability!

If cybercriminals can tamper with smart contracts, the new taproot upgrade will not be beneficial at all. The upgrade is more concerned with efficiency but not security.

Last but not least, the added sense of privacy might be accountable for an increasing number of ransomware attacks.

“Cybercriminals should not get away with the help of bitcoins”

Tech Business News Editorial Team

The TBN team is a well establish group of technology industry professionals with backgrounds in IT Systems, Business Communications and Journalism.

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