The Bitcoin Optech newsletter provides readers with a top-level summary of the most important technical news happening in Bitcoin, along with resources that help them learn more. To help our readers stay up-to-date with Bitcoin, we’re republishing the latest issue of this newsletter below. Remember to subscribe to receive this content straight to your inbox.
This week’s newsletter describes a proposal to allow universal transaction replacement by fee and includes the first post in a new weekly series about preparing for taproot. Also included are our regular sections describing updates to clients and services, new releases and release candidates, and notable changes to popular Bitcoin infrastructure projects.
- Allowing transaction replacement by default: almost all Bitcoin full nodes today are believed to implement BIP125 opt-in Replace By Fee (RBF), which allows unconfirmed transactions to be replaced in node mempools by alternative versions that pay higher fees—but only if the creator of the transaction sets a signal in the original transaction. This opt-in behavior was proposed as a compromise between people who wanted to allow transaction replacement, such as for fee bumping or additive payment batching, and people who objected because allowing replacement simplifies building tools that defraud merchants who accept unconfirmed transactions as final.
Over five years later, it appears very few merchants today are accepting unconfirmed transactions as final, and it’s not clear how many of those that do are actually checking for the BIP125 opt-in signal and treating those transactions differently. If no one is relying on BIP125 signals, then allowing every transaction to be replaceable could provide some advantages, such as:
- Simplifying analysis for presigned transaction protocols (such as LN and vaults) where ideas for using RBF fee bumping need to account for a malicious counterparty’s ability to prevent setting the BIP125 signal. If every transaction could be replaced, this wouldn’t be a concern.
- Reducing transaction analysis opportunity because transactions that opt in to RBF look different onchain than transactions which don’t. Since most wallets consistently opt in, or not, this provides evidence that surveillance companies can use in their attempts to identify who owns which bitcoins. If every transaction was replaceable, there’d be no need to set the BIP125 signal.
- This week, Antoine Riard posted a proposal to the Bitcoin-Dev mailing list for eventually changing Bitcoin Core’s code to allow RBF for all transactions regardless of whether or not they set the BIP125 opt-in signal. The idea was also discussed in the first transaction relay workshop meeting. Several meeting participants mentioned Bitcoin Core PR #10823 as an alternative approach—it allows any transaction to be replaced, but only after the transaction had spent a certain amount of time in a node mempool (originally proposed as 6 hours; later suggested to be…