Bitcoin was created to fulfill Milton Friedman's vision of reliable e-cash that allows transfers from person A to B without either knowing the other. Key roots of Bitcoin are privacy, fungibility, and scalability. Technologies like the Lightning Network, Schnorr signatures, MAST, and Confidential Transactions improve privacy, scalability, and fungibility on Bitcoin. Innovation is ongoing to further these values and address problems like linking transactions.

1. BLOCKCHAIN & CRYPTO VALUES CONF | June 14 - Milan
Back to the Roots of why Bitcoin was created to envision censorship-free
environment driven by privacy-focused technologies
Simona Macellari
Director at BlockchainLab

3. In this presentation I’m going to talk about Bitcoin.
Bitcoin is the only blockchain technology where significant and
groundbreaking innovation is taking place. (just a couple of exceptions)
Bitcoin has a concentration of minds working on it (the best minds).
Premise

4. << I think that the Internet is going to be one of the major forces for reducing the
role of government.
The one thing that's missing, but that will soon be developed, is a reliable e-cash, a
method whereby on the Internet you can transfer funds from A to B, without A
knowing B or B knowing A. >>
- Milton Friedman
Roots

5. “Reliable e-cash”
- Sound money: 21 million of bitcoins, no more -> no inflation
- To be an “e-cash” it needs scalability
“Without A knowing B or B knowing A”
- Privacy: Transactions participants and amounts should be hidden
- Fungibility: Every coin has to be indistinguishable to avoid targeted
censorship
Roots

6. - Scalability
- Privacy
- Fungibility
Roots
- Sound money
Bitcoin Blockchain allows digital
scarcity and anti double-spending
through PoW with an inflation
schedule
Some important issues, but we can
do better..

7. Problems:
- Scalability: A worldwide broadcasted ledger (blockchain) does NOT scale
(1 Megabyte block limit necessary to keep decentralisation)
- Privacy: There is only pseudonymity, not anonymity. Amounts are clear.
- Fungibility: Transactions can be linked together, possible to trace “dirty”
bitcoins
Roots

8. Timeline: technology to the rescue
Late 2015
Segwit
BIP141
proposal
August 2017
Segwit
activated
Beginning 2018
Mainnet Lightning Network
January
2016
Lightning
Network
Paper
For the future:
MAST
Schnoor
Confidential Transactions (?)
Mimblewimble (?)
and more..

9. Bitcoin Lightning Network ⚡️
Lightning Network is surely the
most important revolution
being developed and used on
the Bitcoin network.
Cutting -edge technology
skyrocketing : instant micro
bitcoin transactions, even in
millisatoshi*:
Bitcoin Lightning Network⚡️
*1 millisatoshi = 1 billionth of bitcoin

10. How does Lightning help with our problems?
● Only a limited number of transactions get broadcasted (opening and closing
of channels)
● Transactions are known only between parties -> Onion routing for multi-hop
payments
This means:
● Off-chain transactions -> More possible transactions total (as on-chain
throughput is limited)
● Private transactions -> Huge privacy and fungibility improvement (“chain-
analysis” becomes less relevant, because things do not happen on the
chain anymore)
The beauty of Bitcoin without the Blockchain...

11. We should improve the chain as well
● Lightning was possible only thanks to a soft-fork: Segwit (transaction
malleability fix)
● Schnoor Signatures
● MAST
● Confidential Transactions

12. Schnoor Signatures (soft-fork)
● Basic idea is about aggregating the signatures in a transaction
● Scalability improvement: 1 signatures instead of N broadcasted (less space
used on-chain, more efficient)
● Privacy improvement: Multisig payments indistinguishable
● Privacy improvement: Allows for better CoinJoin

13. CoinJoin methods

14. CoinJoin methods
● Mixing transactions with other willing users
● Privacy improvement: Unable to related inputs to outputs if done on a
decent scale
WITH Schnoor:
● Scalability improvement too: Not only mixing transactions but also
aggregating signatures -> Less space used on-chain
Less fees for the users doing the
CoinJoin
Incentives to adopt.

15. MAST
● Allowing unused parts of Bitcoin scripts to remain hidden through Merkle
Trees (Merklelized Abstract Syntax Trees)

16. MAST
● Scalability improvement: Allowing more complex scripts (“smart contracts”)
with less data published on the blockchain
● Privacy improvement: Hiding all the unnecessary and not executed parts of
your scripts (alternative clauses which could reveal information to third
parties)

17. Taproot - Graftroot
● Problem: MAST Transactions would look different from normal ones
● Solution: Greg Maxwell’s Taproot (and then Graftroot) idea
Annoyingly clever..
Do you remember when I said
“concentration of minds?”

18. Confidential transactions
● Idea to improve privacy: Hide transactions amounts
● Transactions amounts can be hidden, only requirement is that inputs must
match outputs and no inflation should be created. (Rangeproofs)
● Positive side: De-facto privacy fix.
● Negative side: Heavier requirements, less scalable
● Solutions: Off-chain Confidential transactions on side-chains (experimental
idea, see Blockstream’s Liquid)
● Solutions: Bulletproofs dramatically improve rangeproofs confirmation
times and space requirements.
Idea already implemented on Monero (but with poor scalability).
MimbleWimble could leverage CTs to improve scalability too (highly
experimental).

19. Worth mentioning
● Scriptless scripts and Discreet Log Contracts: More private smart
contracts. More private Lightning Channels
● Channel Factories: Possible extreme Lightning improvement
● Dandelion: Changing the way Bitcoin transactions are broadcasted to
improve privacy against network-analysis attacks.

20. Innovation is coming
The tech behind Bitcoin is always in constant evolution.
Innovation is coming and it requires extreme dedication to stay up-to-date with
the latest improvements.
New groundbreaking ideas can come from a simple tweet.

21. simona@bhb.network

22. I think that the Internet is going to be one of the major forces for reducing the role of government.
The one thing that's missing, but that will soon be developed, is a reliable e-cash, a method whereby on the Internet you
can transfer funds from A to B, without A knowing B or B knowing A.
The Crypto Anarchist Manifesto by Tim May….A specter is haunting the modern world, the specter of crypto anarchy.
Computer technology is on the verge of providing the ability for individuals and groups to communicate and interact
with each other in a totally anonymous manner.
A Cypherpunk's Manifesto
by Eric Hughes
Privacy is necessary for an open society in the electronic age. Privacy is not secrecy. A private matter is something one
doesn't want the whole world to know, but a secret matter is something one doesn't want anybody to know. Privacy is
the power to selectively reveal oneself to the world.
ROOTS
WHY BITCOIN WAS CREATED