Bitcoin Optech Newsletter #23

This week’s newsletter provides a reminder about potential feerate increases, summarizes suggested improvements to sighash flags to accompany BIP118 SIGHASH_NOINPUT_UNSAFE, and briefly describes a proposal to simplify fee bumping for LN commitment transactions. Also included are selected recent Q&A from Bitcoin StackExchange and descriptions of notable code changes in popular Bitcoin infrastructure projects.

Action items

  • Monitor feerates: recent reductions in the exchange rate are the likely cause of a modest decrease in hashrate and a possible increase in the number of coins traveling to or from exchanges, which could lead to increased feerates during the next week. Unless there is a dramatic new change in hashrate during the next week, a difficulty adjustment is expected around Sunday that will mitigate most of the recent hashrate reductions.

News

  • Sighash updates: Pieter Wuille started a thread on the Bitcoin-Dev mailing list suggesting two additions for future changes to segwit sighashes, especially BIP118 SIGHASH_NOINPUT_UNSAFE. A signature hash is the data committed to by a signature in a transaction. Normally the hash commits to a list of which coins are being spent, which scripts are receiving the coins, and some metadata—but it’s possible to sign only some of the transaction fields in order to allow other users to change your transactions in specific ways you might find acceptable (e.g. for layer-two protocols).

    Wuille suggests two additions to what metadata is hashed. Both will be optional, but both can become the default for normal onchain wallets. First, the transaction fee is included in the hash in order to allow hardware wallets or offline wallets to ensure they aren’t being tricked into sending excess fees to miners. Second, the scriptPubKey of the coins being spent is also included in the hash—this also helps secure hardware wallets and offline wallets by eliminating a current ambiguity about whether the script being spent is a scriptPubKey, P2SH redeemScript, or segwit witnessScript.

  • Simplified fee bumping for LN: funds in a payment channel are protected in part by a multisig contract that requires both parties sign any state in which the channel can close. Although this provides trustless security, it has an unwanted side-effect related to transaction fees—the parties may be signing channel states weeks or months before the channel is actually closed, which means they have to guess what the transaction fees will be far in advance.

    Rusty Russell has opened a PR to the BOLT repository and started a mailing list thread for feedback on a proposal to modify the construction and signing of some of the LN transactions in order to allow both BIP125 Replace-by-Fee (RBF) fee bumping and Child-Pays-For-Parent (CPFP) fee bumping. In a follow-up email, Matt Corallo indicated that the proposal is probably dependent on some changes being made to the methods and policies nodes use for relaying unconfirmed transactions.

Selected Q&A from Bitcoin StackExchange

Bitcoin StackExchange is one of the first places Optech contributors look for answers to their questions—or when we have a few spare moments of time to help answer other people’s questions. In this monthly feature, we highlight some of the top voted questions and answers made since our last update.

  • How could you create a fake signature to pretend to be Satoshi? Gregory Maxwell asks and answers a question about you could create a value that looked like an ECDSA signature corresponding to an arbitrary public key—such as one known to belong to Satoshi Nakamoto—but without having access to the private key. Maxwell explains that it’s easy—if you can trick people into skipping part of the verification procedure.

  • How to encrypted a message using a Bitcoin keypair? Pieter Wuille and Gregory Maxwell each answer a question about using Bitcoin private and public keys for encryption rather than their typical use for signing and verification. Wuille’s answer provides detail about the mechanism for accomplishing this, but both answers warn users about the dangers of trying to perform encryption with keys and tools that are intended for non-encrypted use with Bitcoin.

  • What is transaction pinning? John Newbery asks and answers a question about the term transaction pinning. His definition describes a way to make it prohibitively expensive to fee bump even a small transaction that signals opt-in Replace-by-Fee (RBF). (Transaction pinning can create problems for protocols such as LN where security depends on some transactions confirming within a certain period of time.)

  • What makes batch verification of Schnorr signatures effective? Pieter Wuille provides a simple explanation for how it’s possible to do several multiplication operations simultaneously on an elliptic curve. This can be significantly faster than doing single multiplication in series, allowing multiple signatures to be verified together faster than they could be individually verified.

Notable code changes

Notable code changes this week in Bitcoin Core, LND, C-lightning, and libsecp256k1.

  • Bitcoin Core #14708 prints a warning when unrecognized section names are used in the bitcoin.conf configuration file. For example, if you create the following configuration file using the name testnet instead of the correct name test, Bitcoin Core would previously silently ignore the testnet options. This merged PR causes it to print a notice: “Warning: Section [testnet] is not recognized.”

      [testnet]
      txindex = 1
    
  • C-Lightning #2087 adds new fields to the results of the getinfo RPC for the number of the node’s peers, number of pending channels, number of active channels, and number of inactive channels. This now matches information displayed by LND’s getinfo RPC.

  • C-Lightning #2096 strips the text lightning: prefixed to a BOLT11 invoice before attempting to process it. This text is sometimes added so that LN wallets can register for it as URI handlers. The prefix text will be striped if it is all lowercase or all uppercase (but not mixed case) per the BIP173 bech32 specification.

  • C-Lightning #2081 and #2092 fix a problem with running multiple RPC commands in parallel. As a user-visible change, lightningd now adds a double newline (\n\n) instead of just a single newline to the final output from an RPC. As single newlines may be used elsewhere in RPC output, terminating with a double newline makes it easy for a non-JSON parser to find the end of the results from one RPC call and the beginning of the results from a subsequent call when the same socket is used for both.

  • Bitcoin Core #14756 adds the ability for the rpcauth.py script to accept a password on stdin rather than as a command-line parameter that might be stored in shell history. This script is the preferred way to generate login credentials for RPC access when not using bitcoin-cli as the same user that started the bitcoind daemon.

  • Bitcoin Core #14532 changes the settings used to bind Bitcoin Core’s RPC port to anything besides the default (localhost). Previously, using the -rpcallowip configuration option would cause Bitcoin Core to listen on all interfaces (although still only accepting connections from the allowed IP addresses); now, the -rpcbind configuration option also needs to be passed to specify the listening addresses. New warnings are printed for unlikely configurations and to advise users about the danger of listening on untrusted networks. It is hoped that this change will help reduce the number of nodes listening for RPC connections on public interfaces, the danger of which was described in the News section of Newsletter #18.

  • C-Lightning #2095 enforces the BOLT2 maximum amounts for channel and payment value after it was discovered that C-Lightning wasn’t obeying these limits. A future change will likely support an optional wumbo bit (jumbo bit) that allows the node to negotiate extra-large channels and payment amounts.