Published on: 2019-10-04T06:45:35+00:00
The idea of creating a shorter transaction that points to an existing output with a larger amount is being discussed by Bitcoin developers. This approach aims to aggregate bitcoin to a UTXO that may not be economically viable otherwise. By utilizing this method, the capacity of lightning channels could be increased without the need to close and re-open a new channel.However, implementing this account-style approach in the current Bitcoin system poses challenges. The UTXO-style is deeply ingrained in Bitcoin's design and cannot be easily modified through a softfork. Unlike UTXOs where every spend drains the entire "account," the issue with an account-style approach arises when the account is overdrawn.To address these challenges, a solution called pay-to-endpoint/payjoin is proposed. This method involves referencing a previous UTXO owned by the payee and creating a new UTXO containing the total value of the old UTXO and the value to be transferred from the payer to the payee. This preserves privacy better than the previously discussed proposal.However, there are some drawbacks to this approach. The payee must be online and cooperate, providing signatures for the old UTXO, which adds more blockchain data. Additionally, the new UTXO needs to publish a script as well.In terms of the Lightning Network layer, it would need to handle the possibility of a "short channel ID" changing. Despite these challenges, exploring the creation of shorter transactions that point to existing outputs with larger amounts could have significant benefits for Bitcoin's scalability and efficiency.
Updated on: 2023-08-02T01:27:23.328267+00:00