New version of Bitcoin Core is available with privacy and performance improvements

Key facts:

The improvements will allow for more privacy, improved performance, and a big step towards Schnorr / Taproot.

It introduces a new type of wallet, called a descriptor with functions to improve privacy.

Bitcoin Core released its version 21 (0.21.0) of the original Bitcoin software client today. Finally, one of the biggest Bitcoin Core updates in recent years is now available. It introduces several new features, including privacy and performance improvements, even taking a big step towards the expected Schnorr / Taproot protocol.

The new version was announced by the developer responsible for maintaining Bitcoin Core, Wladimir J. Van Der Laan, on the Linux Foundation forum. The most notable changes it incorporates the new version are related to privacy and network performance. For example, in terms of privacy, the new version of Bitcoin Core introduces a new format to improve the possibility for Bitcoin nodes to share new Tor addresses with optimized messages.

With the new features included, the mempool will now track whether bitcoin transactions sent through a wallet or remote procedure call (RPC) have been successfully transmitted. Every 10-15 minutes, the node will attempt to announce non-broadcast transactions until requested by a peer via message, or the transaction is removed from the mempool for other reasons, per published specifications.

On the other hand, this version takes one more step towards activating Schnorr / Taproot, one of the comprehensive enhancements developers have been working on for over two years.

The Schnorr signature algorithm, along with Taproot were included in the new version, but without activation on the mainnet. It means that it will be available for application developers to start designing software for experimentation. The inclusion of these algorithms is determinant for the development of Bitcoin technology, Schnorr, on the one hand, presents improvements over the current ECDSA signature algorithm, while Taproot promises improvements in scalability and privacy.

Version 0.21.0 also introduces a new type of wallet, called descriptors, which have several technical differences from the ‘default’ Bitcoin (BTC) wallets.

They are more interoperable between different tools and applications, integrate a flow of pre-signed offline transactions from PSBT, and allow the privacy mode for the QT wallet, which basically erases the history of transactions and balances. This implementation will be especially useful for application developers who design software on Bitcoin Core.