• The BIP 324 upgrade will encrypt communications between several nodes, making it difficult for third parties to track.
• Lead developer Dhruv Mehta explained that the philosophy of the update is centred on preserving the independence and permissionless nature of BTC.
• In the market, BTC fell by 0.04% over the last 24 hours as the asset traded slightly above $26,100.

The mainstream adoption of Bitcoin (BTC) continues to grow amid pressure on some governments and centralized financial institutions to curtail its buzz with tight regulatory frameworks and taxes.

A new update, the Bitcoin Improvement Proposal (BIP) 324, seeks to improve the privacy of Bitcoin transactions making it a step harder for third parties to spy on the activities of users. Made mainstream by Bitcoin Core developer Dhruv Mheta in 2021, the proposal will encrypt communications between nodes making data like transaction location difficult to track.

Presently, the update is nearing its completion as a greater part of the code has been written with tests ongoing. Censorship remains at the centre of this new update following growing threats by some governments and other third parties. 

According to Mheta, the architecture of Bitcoin requires unencrypted traffic between nodes creating a vacuum that can be hijacked by Internet Service Providers (ISPs) causing huge problems.

“If they can attack nodes, they can make it very hard for you to use Bitcoin. They can eclipse your node. They can identify that you are running a Bitcoin Core node. They can identify the source of the transactions. They can make it very very hard to run the node…” he added. 

With access to the communication traffic, the government will have access to information it needs to censor BTC transactions from certain locations defeating the primary purpose of the asset.

A step toward freedom

To Mheta, BIS 324 will not completely eliminate the risk of having a third-party attack but will make it a step more difficult. It makes gathering information harder, requiring the “attacker to connect to every node it wants to spy on.”

Without the update, third parties can take this information without being noticed, leaving users at risk. BIS 324 is an added step because those third parties making an attempt at connecting to every node will be spotted.

The cost implications to connect with every node also reduce the risk of its occurrence.

“If you raise the bar from passive to active, then it takes a lot more resources to do these things, so what then happens is, there has to be a bigger reason to do it. Today attackers could go after very small amounts of Bitcoin because they can potentially be targeted with it.”  Mheta added.