Posted 11 months ago | by @devadmin
The two proposals Schnorr and Taproot were merged into Bitcoin Core last week and will be implemented at a later time.
According to commit history on Github, Bitcoin has just had a silent update pushed into its code which will become active at a later date. When activated, the two code proposals will bring about better transactional capabilities to Bitcoin while increasing the network’s future privacy features.
The update’s pull request posted in September invited Bitcoin developers to review code before it is fully released. That Github request was posted by Bitcoin developer Pieter Wuille and has since undergone over a month of vigorous testing. The Taproot proposal alone saw over 150 developers reviewing the code.
Schnorr signatures and Taproot, Bitcoin Improvement Proposals (BIPs) 340 and 341, are two of the biggest changes to Bitcoin since the activation of Segregated Witness (SegWit)—an code implementation which increased Bitcoin’s blocksize limit—in 2017. In fact, Schorr itself is based on the SegWit mechanism.
The activation mechanism for the BIPs has not yet been decided and there is no time frame as to when the updated code will be live.
Schnorr is an alternative to Bitcoin’s current multisignature wallet mechanism, which, uses multiple private keys to facilitate a transaction from a Bitcoin wallet. However, the Schnorr update combines multiple keys to a single key when a user transacts using Schnorr. This upgrade significantly reduces the data size of multisig payments and helps decongest the network which should help to lower transaction fees.
Taproot takes Schnorr further by introducing a new transaction output version and new ways for users to define conditions for when they spend their Bitcoins. Further, Taproot even allows users—under specific conditions—to regain access to their lost coins. This improves the flexibility of Bitcoin as a monetary network.
The Schnorr/Taproot soft fork is the most significant update to Bitcoin since the SegWit soft fork of August 2017. Adding Schnorr signatures to the Bitcoin protocol has been discussed for years. Schnorr signatures will be implemented as part of a bigger soft fork protocol upgrade called Taproot. Taproot was first introduced by Bitcoin Core developer Greg Maxwell in 2018 and is based on an older proposal called MAST (Merkelized Abstract Syntax Tree).
Taproot promises to increase Bitcoin’s fungibility, improve the functionality of —smart contracts, and boost privacy — by making all transactions appear the same to external blockchain observers i.e. chainanalysis. While this isn’t a full privacy upgrade its a step in that direction.
The upgrade will implement a new style of cryptographic signatures into Bitcoin known as Schnorr signatures, which will change the encryption and reduce it. At present, Elliptic Curve Digital Signature Algorithm (ECDSA) signatures are used to sign transactions on the Bitcoin blockchain. These signatures are typically around 72 bytes, where Schnorr signatures are nmaxed at 64 bytes. This represents a 12 percent reduction in size.
Schnorr signatures enable signature gathering through Taproot, which merges multiple private keys into a single ‘master private key’ that can sign transactions. This aggregation should decrease transaction fees, lower the cost of operating a node, and improve current and future scalability. Taproot will also improve sophisticated smart contracts, such as exchanges that rely on multi-sig wallets.
Instead of using a typical 2-of-3 multi-sig wallet design featuring a hot key, a trusted third party key, and a cold wallet emergency backup key, where participants would need to broadcast all three keys to spend the coins, Taproot aggregates these keys into a single Schnorr signature, potentially reducing network fees for exchanges by up to 30 percent according to the Github technical document.
Further, once implemented, the Taproot/Schnoor upgrade could accelerate the process of block validation by as much as 250% and cut transaction fees for users by as much as 30% to 75%, according to Square Crypto product manager Steve Lee. Lee made this prediction in a presentation in the summer of 2019, expressing that this would cause a “Bitcoin revolution.”
As previously mentioned while it may take a year for this code update to go live, it could also be a shorter time frame. With various bullish news for Bitcoin, it seems fitting that the number one cryptocurrency in the world would also get an upgrade to its software protocol which improves its usability.
Bitcoin is currently trading at [FIAT: $12,945] DOWN -0.1% in the last 24 hours according to Coingecko at the time of this report.