The latest edition of the Bitcoin Optech Newsletter delivers a comprehensive overview of key developments across the Bitcoin ecosystem, from network metrics and protocol improvements to critical security practices and privacy-enhancing proposals. Whether you're a developer, operator, or enthusiast, this update offers valuable insights into the ongoing evolution of Bitcoin’s infrastructure.
Action Items
👉 Discover how secure disclosure practices can protect your project and users.
- Review your responsible disclosure process: It's essential that security researchers can report vulnerabilities safely—using encryption like PGP—and anonymously, ideally via tools such as Tor. As highlighted in the news section, a recent consensus bug in Bitcoin Cash could have enabled attackers to steal funds from exchanges, even those requiring multiple confirmations. Ensuring smooth, confidential reporting channels is not just good practice; it's a necessity for network security.
Consider testing your own process: assign a team member to install Tor and attempt to submit a report using only publicly available information. If you operate a bug bounty program, clarify that full rewards will be granted to PGP-signed initial disclosures, with compliance details collected later.
Dashboard Updates
Transaction Fees Remain Very Low
Transaction fees on the Bitcoin network continue to remain exceptionally low. Users willing to wait for 10 or more block confirmations can transact at or near the default minimum fee rate. This presents an ideal opportunity for UTXO consolidation, helping users reduce future transaction costs by combining smaller outputs into larger ones.
BTC Hash Rate Reaches New Peaks
The estimated hash rate for BTC briefly touched 60 EH/s on August 10, with a 7-day average sitting at 48 EH/s. This sustained growth reflects increasing confidence and investment in Bitcoin’s mining infrastructure, reinforcing network security and decentralization.
Transaction Volume Per Block
The number of transactions per block shows periodic trends, typically peaking between 13:00 and 17:00 UTC daily. The 25-block moving average chart (available via the Optech beta dashboard) provides a smoothed view of transaction throughput, useful for analyzing usage patterns and mempool dynamics.
Key News Developments
Supporting Secure Vulnerability Disclosure
Cory Fields, a Bitcoin Core developer and member of the MIT Media Lab’s Digital Currency Initiative (DCI), recently revealed his role as an anonymous source in disclosing a critical consensus vulnerability in Bitcoin Cash—one that could have allowed attackers to double-spend across exchanges. His experience underscored the challenges researchers face when trying to responsibly disclose flaws.
Neha Narula, also from DCI, published recommendations aimed at reducing catastrophic risks in cryptocurrency projects. These include establishing clear, secure, and anonymous reporting pathways. Organizations are encouraged to audit their own processes to ensure they’re researcher-friendly.
👉 Learn how secure development practices can prevent costly exploits.
Introducing Pay-to-Endpoint (P2EP)
A new privacy-enhancing proposal called Pay-to-Endpoint (P2EP) has emerged from discussions by Adam Ficsor (zkSNACKs) and Matthew Haywood (Blockstream). Unlike previous protocols requiring consensus changes, P2EP operates within existing rules.
Here’s how it works:
The payer contacts a server controlled by the recipient—similar to BIP70—providing a signed transaction as proof of intent. The recipient then shares data enabling collaborative CoinJoin-style transactions. When executed, this obscures which inputs belong to the payer versus the receiver, significantly weakening blockchain analysis.
If widely adopted, P2EP could make transaction tracing unreliable. Privacy-focused wallets and platforms like BTCPay Server are already considering implementation support.
Bitcoin Core Wallets to Use Low-R Signatures
Bitcoin Core PR #13666 introduces a change where wallets will generate only low R-value signatures, eliminating an extra byte in half of all transactions. While DER encoding requires a flag byte to indicate high R values, this update ensures only low R signatures are used—by retrying with different nonces if necessary.
Benefits:
- Saves ~1 byte per signature, reducing transaction size.
- Increases blockchain capacity by thousands of transactions per day.
- No consensus change required.
Trade-offs:
- Signature generation time doubles on average.
- Slight reduction in entropy (1 bit), though not practically significant.
While this improves efficiency, it may make Bitcoin Core transactions slightly more identifiable if other wallets don’t adopt the practice.
Two-Step Reduction of Minimum Relay Fees
Bitcoin Core developers are advancing plans to lower the minimum relay fee in two phases:
- First, reduce the default fee for nodes and miners.
- After observing sufficient adoption and confirmation of low-fee transactions, lower the wallet-level minimum in a future release.
This cautious approach accounts for varied update cycles among wallets, nodes, and miners. Future updates will provide guidance on how organizations can help test and promote adoption.
P2P Protocol Updates: Limiting Locator Sizes
To improve node resilience against potential resource exhaustion attacks, Gregory Maxwell proposed limiting the number of block hashes (locators) allowed in getblocks and getheaders messages. While testing didn’t confirm serious performance issues, setting a cap at 101 locators—matching BitcoinJ’s maximum—ensures compatibility while preventing abuse.
Developers using custom P2P implementations should verify that their software complies with this limit. Feedback is welcome on the bitcoin-dev mailing list.
Schnorr BIP Discussion Concludes Positively
Recent discussions on the bitcoin-dev mailing list around the Schnorr signature BIP concluded without requiring changes to the proposed specification. This consensus strengthens confidence in the chosen algorithm parameters and paves the way for future integration, particularly with Taproot and MuSig advancements.
Notable Code Submissions
Bitcoin Core #13925: Increased File Descriptor Limit
This update raises the maximum number of file descriptors available to Bitcoin Core’s internal databases, potentially allowing more network connections—especially beneficial for nodes configured to accept over 117 inbound peers. Note: increasing connection limits is not recommended unless operationally necessary.
LND #1644: Fee Unit Standardization
User-input fees in sat/vB are now automatically converted to sat/kw (satoshi per kiloweight), aligning with the Lightning Network’s formal protocol definitions. This prevents confusion and ensures consistent fee handling across implementations.
C-Lightning #1811: Smarter HTLC Commitment Sending
A node will no longer send HTLC commitment messages unless it has received communication from the peer within the last 30 seconds. If needed, it first sends a ping. This prevents wasted effort on doomed payments due to connectivity issues.
Additional improvements include:
- Exponential backoff for reconnection attempts.
- Randomized delays to obscure retry patterns.
These changes enhance reliability and reduce network strain during transient outages.
Frequently Asked Questions
Q: Why is responsible disclosure important for Bitcoin projects?
A: Vulnerabilities in consensus-critical systems can lead to massive financial losses. Allowing anonymous, encrypted reporting encourages researchers to come forward without fear of retaliation or exposure.
Q: How does P2EP improve privacy without changing consensus?
A: P2EP leverages off-chain coordination between payer and payee to enable CoinJoin-like mixing. Since no new script types or rules are introduced, it works within today’s Bitcoin protocol.
Q: What are low-R signatures, and why do they matter?
A: They eliminate an optional byte in DER-encoded signatures, saving space. Over thousands of transactions, this adds up to meaningful blockchain efficiency gains.
Q: Will lowering relay fees increase spam?
A: The two-step approach minimizes risk. By first adjusting node defaults and monitoring miner behavior, developers ensure low-fee transactions are still processed before encouraging wallet-level changes.
Q: How does limiting P2P locators improve security?
A: Large locator lists could force nodes to perform excessive disk lookups. Capping them at 101 prevents potential denial-of-service vectors while maintaining functionality.
Q: Is the Schnorr BIP ready for deployment?
A: While finalized parameters have broad support, integration depends on broader upgrades like Taproot. The positive discussion signals strong technical alignment within the developer community.
👉 Explore how next-gen transaction protocols are shaping Bitcoin’s future.