Bitcoin’s Long Anticipated Upgrade-Taproot Has Been Activated.


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Author: Maria Andretti

The long-awaited Bitcoin upgrade became a reality at exactly 5:15 UCT(00:15 EST) on Sunday, 14th November. The upgrade–taproot activated at block 709, 632, providing access to developers to add new features for privacy, scalability, and security improvement on the network. 

The lock-in for the upgrade happened in June when more than 90% of miners decided to signal their support. The waiting period between lock-in and activations has, however, provided a window period for miners and node operators to complete their upgrade to the newest version of Bitcoin core, 21.1, which holds the merge code for the taproot. Without completing the upgrades, miners and node operators won’t be able to enforce the new rule or perform new types of transactions. 

What is Taproot?

Taproot, which was first proposed in 2018 by Greg Maxwell, is defined as the melting pot of different technological innovations through the history of Bitcoin combined into one upgrade. The improvement proposals that codified taproot were prepared by Tim Ruffing, Pieter Wullie, Jonas Nick, and A.J Townes and were merged into the Bitcoin Core in October 2020. 

Beneath the root of the upgrade are “Schnorr signatures,” which is different from the cryptographic scheme ECDSA—the digital signature used by Bitcoin traded on CEX-IO. This signature allows users to sign transactions with a private key for approval and send them to another destination. 

With the taproot upgrade, “Schnorr signatures” are now being used as digital signatures, adding new features that enable more privacy, scalability, and security of transactions. 

Aside from Schnorr being faster and lighter than ECDSA, it also comes with an additional benefit of being “linear,” a combination designed to increase transaction privacy and enable more lightweight and complex “smart contracts”–encoded contracts with self-executing rules. 

Taproot has been foreseen to have several positive repercussions on projects across the ecosystem. For example, transactions involving more than one signature out of the signers will be faster and consume fewer data. 

Scalability 

Another problem tap root is expected to address is the limited transaction space which makes scalability difficult for digital currency. Developers find it challenging to increase limits without impingement on Bitcoin’s decentralization. Due to this, they have been in continuous search for ways to effectively use the currently available block space. 

With Schnorr being able to combine multiple signatures into one, it has the tendency to reduce the amount of data stored in the blockchain. For instance, this data reduction can stimulate the scalability of MuSig2 – a multi-signature scheme that requires a number of signatures for single transactions. 

Privacy 

The transaction history of Bitcoin traded on platforms like Bittrex is very public. It is something a curious user can easily search for with the aid of a public block explorer. But with the taproot upgrade, there’s a chance for developers to increase user privacy. 

With taproot, users’ transactions can still be searched, but for complex transactions like smart contracts, transaction histories can be hidden. An example is the Lightning Network transaction which currently stands out on blockchain but can now be made to look like other transactions, thereby increasing transaction privacy. 

Wrap Up

Despite the upgrade, only a little more than 50 percent of the known Bitcoin nodes are signaling support for the upgrade. The rest are still running the old software, meaning they won’t be able to endorse the new rules. 

Also, the activation does not mean the whole work is done. There is still more work that needs to be done. For instance, wallet developers still need to write codes that will support the new rule, which may take a long time going by history. It took almost two years for the 50% adoption of the last Bitcoin upgrade- Segwit. Although one thing to note is that this new development has expanded developers’ toolbox as they continue to build and create new ideas. 

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Maria Andretti is an Administrative Assistant with eight years of experience working alongside the VP finance of a Fortune 500 company.