Top 4 Privacy-Purposed Bitcoin Improvement Proposals (BIP) for Scalability and Fungibility

  • Bitcoin has a few shortfalls that affect its performance as the number one cryptocurrency.
  • There have been a number of proposals on how to improve on this and the following are four which can significantly improve privacy and scalability.

Bitcoin though the number one cryptocurrency, has its shortcomings. One of the major weaknesses is its inability to scale due to the limited block size, making it impossible to include more transactions in a block even though more people are getting into Bitcoin.

This hasn’t just been a major concern, but has been grounds for the splitting of the Bitcoin blockchain.

Bitcoin Transactions Lack Privacy Features

Another weakness is the fact that Bitcoin transactions are anything but private. This makes such transactions easily traceable. In fact, Bitcoin transactions are more readily traceable than transactions in fiat currencies. This is a problem especially at this time when the governments seek to control everything about financial transactions.

Thankfully, Bitcoin developers have made some proposals to correct these weaknesses and here are the most important 4 which if implemented will significantly improve the user experience and confer the kind of privacy that Bitcoin users deserve as well as improve scalability.

Schnorr and Taproot

Schnorr signature scheme is a method of allowing multiple signers to sign a transaction while making it look like a single signature on the blockchain. The signers use one aggregate signature rather than publishing several public keys and signatures separately on the blockchain.

This significantly improves scalability by reducing the amount of space taken by signatures while enhancing the privacy of signers as they cannot be separated into separate signatures. Taproot also provides greater privacy with smaller transactions, thus encouraging scalability as well as transaction privacy.


This is another Bitcoin privacy protocol. It is a network layer anonymity solution that helps to improve on the Bitcoin peer-to-peer privacy.

Although it had a slight fault at first, an improved version known as Dandelion++ is set to correct the wrongs in the first version and will likely be included in the next Bitcoin version. This will prevent the broadcasting of transactions to the network for every detail to be visible by other users on the network.


This is another anonymity-centered proposal. It is aimed at improving the anonymity of transactions by not requiring a trusted setup using the zero knowledge proof, a method that enables a user to prove that they know something without revealing any detail to prove that.

Bulletproofs also significantly reduce the size of transactions by 90% thus saving more storage space.

Confidential Transactions

As the name implies, the proposal is aimed at improving confidentiality in transactions. It is a proposal to hide transaction amounts from any third party and make it visible only to the sender and receiver. Unlike Bulletproofs though, Confidential Transactions required a trusted setup and so had to be improved on.

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