Posted 3 weeks ago | by Catoshi Nakamoto
Bitcoin gets its long-awaited Taproot upgrade, enabling privacy features and smart contracts, here’s what has changed!
Bitcoin Historic Taproot Upgrade, Here’s What Changed
In short, the Taproot update means greater transaction privacy and smart contract implementation for Bitcoin.
Woohoo! #Bitcoin #Taproot has activated! 🥕🚀🌒
Thank you Bitcoin developers for years of hard work and the community for the support. You can donate SATs to devs here: https://t.co/w85twmQJMA
Exciting future ahead! ⚡️ pic.twitter.com/GJSWT4MOO9
— Bitcoin LightningNetwork+ News ⚡️ (@BTC_LN) November 14, 2021
The two previous proposals that make up the Taproot upgrade, Schnorr and Taproot merged into Bitcoin Core last year as Bitboy Crypto reported.
As Bitcoin is decentralized consensus needs to be reached by 90% of miners on the network in order for an upgrade to be confirmed. Consensus was reached in June earlier this year, and a date was set to activate the Taproot upgrade. The upgrade thus far has been successful without any known issues at the time of this report.
According to commit history on Github, Bitcoin has activated Taproot bringing better transactional capabilities to Bitcoin while increasing the network’s future privacy features. Additionally, Bitcoin has added support for smart contracts with this upgrade a long awaited capability that Ethereum has enjoyed for many years.
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 that increased Bitcoin’s blocksize limit—in 2017. In fact, Schnorr itself is based on Segwit which was much more contested by the Bitcoin community at the time.
Currently, Bitcoin uses an “Elliptic Curve Digital Signature Algorithm,” (ECDSA) which creates a signature from the private key that controls a Bitcoin wallet, and ensures that Bitcoin can only be spent by the holder. Elliptic Curve Digital Signature Algorithm (ECDSA) signatures are used to sign transactions on the Bitcoin blockchain. These signatures are typically around 72 bytes, whereas Schnorr signatures are maxed at 64 bytes. This represents a 12 percent reduction in size which will make block inputs smaller.
Taproot will add Schnorr signatures, which basically obscures multi-signature transactions.
Schnorr is an alternative to Bitcoin’s current multi-signature, 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.
In fact, Square Crypto product manager Steve Lee has previously said in 2019 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%. He further expressed that Taproot would initiate a “Bitcoin revolution.”
The Schnorr/Taproot soft fork is the most significant update to Bitcoin since the SegWit soft fork of August 2017. However, adding Schnorr signatures to the Bitcoin protocol has been discussed for years. Likewise, 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).
MAST is being used by the Taproot upgrade, to improve Bitcoin’s scripting language according to Bitcoin developer, Hampus Sjöberg.
“It (MAST) can help make smart contracts more efficient and private by only revealing the relevant parts of the contract when spending,” Bitcoin developer Hampus Sjöberg said, who manages Taproot.watch, a dedicated website for the upgrade.
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 it’s a step toward that direction…
It’s important to mention that with Taproot Bitcoin smart contracts can be created on both Bitcoin’s core protocol layer and on layer 2 or the Lightning Network, a payments platform built on top of Bitcoin, which enables instant and cheaper transactions. Although upgrades are great they are nothing unless developers build on the network. It’s time for Bitcoin developers to get to work! Bitcoin seems to be trading sideways over the weekend as it prepares for its next move with many eyeing a more bullish narrative estimating that BTC will surge to $100K with some even predicting higher prices.
Bitcoin is currently trading at [FIAT: $64,764.67] UP +0.3% in the last 24 hours according to Coingecko at the time of this report.