Taproot, Bitcoin’s Long-Anticipated Upgrade, Has Activated
What is Taproot?
Taproot was first proposed by Greg Maxwell in 2018, as various technical innovations for Bitcoin for its entire existence in one update. Since 2018, Bitcoin improvements have been implemented three times, codified by Taproot, were written by Peter Vuill, Tim Ruffing, A. J. Townes and Jonas Nick and merged into Bitcoin Core in October 2020.
The update is based on the Schnorr algorithm. Bitcoin uses the ECDSA cryptographic scheme for its “digital signatures”, when a user signs a transaction with his private key to confirm its sending.
Every transaction using Taproot will now follow a new scheme for digital signature, after upgrading Taproot to the Schnorr scheme, adding new features designed to increase the privacy, security and scale of Bitcoin transactions.
The Schnorr signature has a number of advantages over ECDSA: higher speed, an additional “linearity” function that allows you to enhance the confidentiality of transfers and with its help, it will simplify the creation of contracts.
Taproot will have many positive effects on projects in the ecosystem. For example, transactions with multiple signatures that require more than one signatory from a group are cheaper and require less data.
Privacy
Taproot is a fairly large-scale project that has united the efforts of many developers from around the world seeking to improve bitcoin’s privacy indicators, due to the fact that its transactions are publicly available. An interested person can open any transfer ever made in bitcoin using a public block explorer such as Mempool.space.
This is still attached to Taproot, but some of the information of the most important translations may be hidden. For example, while Lightning Network transactions are highlighted in the block chain right now, Taproot gives them the opportunity to visually resemble other transfers, thereby increasing the confidentiality of transactions.
Scalability
Taproot also has to decide what to do with the limited space for bitcoin transactions, which is a critical factor in the scalability of the digital currency. Developers cannot simply increase this limit without breaking Bitcoin’s decentralization, so they are looking for new ways to use the available resources for the Bitcoin space.
The Schnorr algorithm can be used to connect several signatures into one, which will reduce the amount of data stored in the block chain. Such data reduction can increase the scalability of Music2, for example, a multi-signature scheme developed by Blockstream researchers that requires multiple signatures for a single transaction.
What to expect from Bitcoin and Taproot
So far, only a little more than half of the known bitcoin nodes indicate support for the upgrade. Others are using old software, which means they won’t be able to apply the new Taproot rules yet until Bitcoin is upgraded to Kernel 21.1. But even then, the network will still work fine.
Not all miners who have not switched to the new software will be able to work successfully on the network and will not receive new restrictions for blocking. But the developers have done a lot to ensure that miners have enough opportunities to get into this issue. More than 90% of miners have already stated that they plan to switch to the new software, so Taproot managed to “connect” in June, and therefore there was a delay of 5 months before the start of activation.
But activation does not mean that all the work is completed. Users cannot send or receive new types of transactions until certain bitcoin wallets support them, and most wallets are not enabled yet. Wallet developers need to update the code on their wallet to open access to such transactions.
If the date can serve as any guide, it may take months or years for wallets to catch the train. For example, Segwit, a recent relatively large Bitcoin upgrade, took about two years to achieve a 50% upgrade.
Although Taproot offers more complex use cases (for example, performing custom Lightning Network transactions that are no different from the usual ones), developers have a need to create these tools and apply them separately.
The most important thing to pay attention to is that Taproot allows you to create new developments and new solutions. This gives developers an expanded set of tools to work with as they continue to create, iterate, and create ideas. Some of these projects have already entered the development stage. Many of them are still unimaginable.
