What is the new Bitcoin Core client has under the hood

What the new Bitcoin Core client has under the hood

Since yesterday evening you can download the new Bitcoin Core Client. Besides several minor improvements and bug fixes, the new version 0.16.0 has an important change: It fully supports Segregated Witness. Another step towards SegWit adoption.

Most people manage their assets in Bitcoin with ordinary wallets - if they do not use Exchanges or Coinbase. The use of wallets, which gives the owner knowledge about the private keys, basically enough to secure your own money. But only those who operate a node fulfill the bon mot "Be your own bank" in its completeness. They are in full ownership of the Blockchain and thus make a significant contribution to the decentralization of the Bitcoin network. In addition, because they can decide for themselves which version of the core client to use, they play a key role in governance bitcoins.

Since yesterday evening the version 0.16.0 of the Bitcoin Core Client can be downloaded. It was briefly mentioned as part of the SegWit acceptance by Bitfinex and Coinbase. This article is intended to give you a comprehensive look at what's new in the current version.

HD wallets, BIP159, Replace by fee and SHA256 optimization

Before addressing the main innovation, mention should also be made of those changes that are dying. First, hierarchical-deterministic wallets are now set as default. For Hierarchical-Deterministic Wallets, the private keys for each transaction are regenerated from a series of words. Well-known examples of such wallets are Ledger Nano S, Jaxx and Trezor. It is important to emphasize that users who have previously created ordinary wallets, do not have to worry. The old wallets are still usable.

Another innovation is that Replace by fee is now switched on by default. Replace by fee (RBF) is a feature proposed with BIP125 by David Harting and Peter Todd. RBF allows transactions to be re-substituted from the mempool by others. This can be especially useful if you realize that you have set too low a transaction fee.

In addition, the SHA256 algorithm was optimized, which accelerated the SHA256 hash generation by 50%.

Finally, a cornerstone was laid for BIP159: In BIP159 it is proposed that nodes that did not store the entire history of the transaction - this is called Pruned Nodes - can signal this. So they can be better integrated into the network. Although this Bitcoin Improvement Proposal has not yet been fully realized, Pruned Nodes can now send a signal to the network indicating their limitation on recent transactions.

Standard Acceptance of Segregated Witness

So far some innovations that are talked about less often. The topic of segregated witness in the technical field is currently very important. SegWit can provide its contribution to the answer to the scaling problem and is an essential prerequisite for the launch of the Lightning Network.

The Bitcoin Core Client 0.16.0 now supports Segregated Witness across the board. Both in terms of wallets SegWit addresses are accepted as well as in terms of the user interface, this protocol update can now actually be used.

Similar to the acceptance by Coinbase and Bitfinex, this is an important milestone in the widespread implementation of Segregated Witness and the Lightning Network. As in the case of the UASF (User Activated Soft Fork), it may be the nodes that are driving forward an important step towards the sustainable solution of the scaling problem.