Taproot, Bitcoin’s Long-Anticipated Upgrade, Has Activated

At 5:15 UTC (00:15 EST) on Sunday, Nov. 14, Taproot, the long-anticipated Bitcoin upgrade, activated at block 709,632, opening the door for developers to integrate new features that will improve privacy, For instance, while Lightning Network transactions currently stand out on blockchain, Taproot offers them the ability to look like any other transaction, further enhancing transaction confidentiality. and security on the network.

The upgrade locked in back in June, when over 90% of miners chose to “signal” their support. A scheduled waiting period between lockout and activation has since given node operators and miners time to completely upgrade to the latest version of the Bitcoin kernel, 21.1, that contains the code merged to taproot. It's only once they can apply the new rules for using the new transaction type.

Read more: Why Bitcoin’s Taproot Upgrade Matters

What does Taproot stand for?

Taproot is a crucible of various technical innovations across the history of bitcoin in a single upgrade. It was first proposed by Greg Maxwell in 2018. Since then, the three Bitcoin Improvement Proposals (BIPs) that codified Taproot were written by Pieter Wuille, Tim Ruffing, A.J. Townes and Jonas Nick, and merged into Bitcoin Core in October 2020.

At its root are "Schnorr signatures." Bitcoin has used an ECDSA crypto schema for its "digital signatures" where a user signs a transaction with their private key to approve the shipment elsewhere.

Taproot updates another pattern named Schnorr. Each transaction using Taproot will now use this new digital signature scheme, adding capabilities designed to enhance the confidentiality, security and scale of Bitcoin transactions.

Moreover, it is smaller and faster than the ECDSA, Schnorr signatures have the added benefit of being “linear,” a combination that will boost Bitcoin’s transaction privacy and allow for more lightweight and complex “smart contracts” (an encoded contract with self-executing rules).

The tap root will have a number of positive impacts on a variety of projects in the ecosystem. For example, multi-signature transactions, involving more than one signatory of a group of signatories, will be less costly and will use less data.

Read more: How Bitcoin’s Taproot Upgrade Will Improve Its Tech Stack

Taproot is part of a greater effort by developers worldwide on a mission to enhance Bitcoin's privacy because its transaction history is very public. A curious user can look up any transaction ever sent on Bitcoin using a public block explorer such as Mempool.space.

It always happens with Taproot. Details of some more complex transactions (often called "smart contracts") will be hidden.

Scalability

Another issue Taproot should address is Bitcoin’s limited transaction space, which makes expansion, or scalability, a huge problem for the digital currency. Another problem Taproot should tackle is the limited transaction space of Bitcoin, making expansion, or scalability, a huge problem for digital currency.

Developers cannot simply increase this limit without encroaching on the decentralization of Bitcoin, so they are still looking for ways to make use of the currently available blockspace more effectively. Since Schnorr signatures can be used to combine several signatures into a single signature, they can help reduce the amount of data stored in the blockchain.

This smaller data size could increase the scalability of MuSig2, for example, a multi-signature system developed by Blockstream researchers, which requires a certain number of signatures for a transaction.

So far, only a little more than half of known Bitcoin nodes are signaling support for the upgrade. Until now, just over half of the known Bitcoin nodes report support for the upgrade. The others use old programs, which means they can't apply the new Taproot rules yet – at least, step before upgrading to Bitcoin Core 21.1.

But in spite of that, it's still going to work very well. All miners who have not updated the new software will not be able to run successfully on the network and they will miss earning new block rewards. But the promoters did a great deal to give the miners enough time to learn about it.

Indeed, More than 90 per cent of minors have already indicated their intention to switch to the new software, So Taproot got "" in June, and the reason it took five months to activate. This does not mean that all work is done. Users will not be able to send or receive the new type of transaction before their Bitcoin portfolio supports it – and most portfolios still don't support it.

Portfolio developers will have to write a new code for their portfolios in order to make these trades possible. It took roughly two years for Bitcoin’s last comparably large upgrade, SegWit, to reach 50% adoption, for example.

It took about two years for the latest Bitcoin upgrade of comparable size, SegWit, to achieve 50% adoption, for example.

Without saying, Whereas Taproot allows for more complex use cases (such as as make private Lightning Network transactions that seem no different than normal transactions) developers will still need to build these tools and implement them separately. Remember that Taproot will allow for new developments and solutions. It provides developers with an expanded toolbox with which to work while they continue to imagine, iterate and build. A few of them are already under way.

Read more: The Investor’s Perspective on the Bitcoin Taproot Upgrade

Update: Sunday, November 14, 5:15 UTC: Headline and copy edited to reflect Taproot activation. Read more: Investor Outlook on Bitcoin Taproot UpgradeUpdated: Sunday, November 14, 5:15 UTC: Title and copy published to reflect Taproot activation.