Taproot, which goes live on November 16th, will be a major upgrade to the Bitcoin network. Bitcoin hasn’t had an upgrade since 2017, which was contentious among miners, leading some to fork into Bitcoin Cash. Four years later, Taproot is slated to be very important to Bitcoin, but why?
In this forthcoming upgrade, three new Bitcoin Improvement Proposals will take effect. Taproot has been in the works for nearly two years. By the end of 2020, the three improvement proposals had 74% adoption by the miners. By this summer, that number increased to 90%, which means that the implementation of Taproot is a go.
One of the interesting aspects of Taproot is an upgrade to privacy, in the form of “Schnnorr signatures”. According to experts, these signatures are a significant upgrade to the current way transactions are signed and coins are moved on the network. The upgrade allows for better use of computational resources and storage by eliminating the need for multiple public keys and signatures.
In terms of privacy, “all Schnorr spends will resemble each other, making it impossible for chain analysis to differentiate between multisig spends and single signature spends. This will invalidate several heuristics used by chain analysis.” This component of the upgrade is the most significant, especially as many people have decried Bitcoin’s lack of privacy–it is a step in the right direction.
In short, it will make multisig transactions less computationally intensive and more private. It will also make transactions cheaper, for example, it will be cheaper to open and close a Lightning Network channel. The other aspect of the upgrade will introduce a type of merkel tree which makes smart contracts on Bitcoin more secure, another good sign if Bitcoin is to be a productive asset.
— grublés (@notgrubles) October 22, 2021
The new code has been “peer-reviewed by more than 150 developers” and just like anything else coming out of Bitcoin Core, the upgrade will put robust security first. A narrative that people are forgetting when it comes to Taproot is that it opens the doors for DeFi on Bitcoin and much better smart contract functionality. Currently, Bitcoin blocks require all the data involved with a transaction to be included in the transaction data.
That is what makes Bitcoin slower and more computationally intensive. Taproot fixes this; with the implementation of the Merkel trees, it allows for confirming whether the data within a Merkle tree is true without the need to download all of the data. This will make Bitcoin faster, more efficient, and more in line with the goals of all the popular smart contract layer 1’s.
Many have argued Taproot is a major threat to Layer 1’s with smart contract functionality, which is something many pundits on crypto twitter are overlooking. Bitcoin is not an ancient fossil, the developers are making strides to compete with the Ethereum’s, Solana’s, Avalanche’s and Algorand’s of the world.
There are only 3450 blocks until Taproot goes live on Bitcoin–with all the talks of ETF’s taking center stage, let’s not forget that Taproot will make Bitcoin leaner, meaner, and even greener–all in Q4 of the halving year…that is to say, it is a BIG DEAL.
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