The new Bitcoin Taproot update will soon optimize network security and privacy.
In Short
- Taproot upgrade will resolve important Bitcoin issues
- A bug so far was partially fixed, pending a new software update.
- Taproot’s official arrival on the Bitcoin mainnet will arrive in mid-November.
What is Taproot? Why is it so important for Bitcoin? Bitcoin, the world’s most important cryptocurrency that opened the doors to a new decentralized financial system, is about to add further improvements through the Taproot update. The network is preparing to receive its latest and most significant update, scheduled between November 14 and 16. Bitcoin developers reported in June that they’d activate Taproot as a soft fork on block number 709,632, which will be mined around the dates indicated.
Taproot, Bitcoin’s most anticipated upgrade
Bitcoin will activate new improvements and functionalities to optimize the network through Taproot. The latest update focuses on improving Bitcoin’s security and privacy and making transactions within Bitcoin run faster and cheaper. In addition, Taproot will introduce several changes to simplify the execution of Smart Contracts on the Bitcoin blockchain to make it easier to create them. Developers integrated Taproot into Bitcoin Core in October 2020. Bitcoin’s most significant upgrade is less than 1,650 blocks from becoming a tangible reality on the network. Overall, Taproot promises to revolutionize Bitcoin.
Bitcoin, which leads the crypto market by market capitalization, wants to remain a leader in innovation and development. In addition to improving its security, privacy, and scalability through Taproot, the network will support complex Smart Contracts and enable faster and cheaper transactions. These improvements and optimizations will make Bitcoin a much more competitive network.
More complex smart contracts
Taproot is one of the most critical and anticipated updates to Bitcoin. Bitcoin will improve its ability to process Smart Contracts through this soft fork, creating and executing more complex Smart Contracts within its blockchain network. Currently, smart contracts are one of the most valued and demanded functionalities within the crypto industry, dominated mainly by blockchains such as Ethereum, Solana, Polkadot, and now Cardano.
According to data from the Taproot Watch web portal, there are 12 days left until the activation of this critical update in Bitcoin. In June this year, Bitcoin nodes voted in favor of Taproot’s activation on the mainnet, indicating their support through the blocks mined on the network. As noted by developer Jameson Lopp, 92% of blocks mined during a single period indicated support for Taproot’s activation on the Bitcoin mainnet. Before the upgrade, the network required signals from 1,815 blocks. Each period in Bitcoin consists of 2,016 blocks, mined approximately every two weeks.
Four years in development
However, despite the consensus that nodes approve Taproot, only 49% of nodes have upgraded to receive the soft fork. The web portal created by Luke Dashjr, a Bitcoin developer, tracks the real-time status of the network’s nodes concerning Taproot.
Although the activation of Taproot was approved by the network nodes this year, the update has been in development for about four years since Greg Maxwell introduced it. Bitcoin, which capitalizes on the crypto market, wants to remain a leader in innovation. The Taproot upgrade will introduce several proposed network enhancements, such as BIP-340, BIP-341, and BIP-342, introducing Schnorr signatures. Merklized Abstract Syntax Trees (MAST) and improvements to the Bitcoin programming language named Bitcoin Script.
Enhanced security and privacy
The improvements introduced by Taproot will make BTC transactions much more secure and reliable. And as a bonus point, they will improve the scalability of the network. The world’s leading cryptocurrency, which has behaved as an efficient store of value so far, could have new functionalities. As we have said, the most important ones are supporting and implementing more complex smart contracts and greater privacy and security in network transactions, leading to new use cases for Bitcoin.
What is Taproot?
Taproot is a Bitcoin network upgrade designed to improve privacy and process Smart Contracts. This improvement will change the structure of transactions, increasing speed and reducing transaction costs. Its activation is scheduled for November after 90% of the network’s miners support it. The last Bitcoin update was SegWit, activated in August 2017.
Bitcoin transactions build upon a series of scripts or payment conditions that define how to spend the bitcoins in the next transaction. The Taproot update adds improvements to these scripts, simplifying complex transactions. According to a large majority, these improvements will make it impossible to distinguish whether a transaction within the network is conventional or advanced, thus improving privacy.
Regarding the privacy improvement that Taproot can bring to Bitcoin, Edward Snowden considers that the update will not solve the privacy problems Bitcoin poses. There seems to be a greater consensus that Taproot will reduce the cost and validation time of transactions, which could be a breakthrough in Bitcoin’s adoption as a means of payment. In addition, the update significantly reduces the amount of information transmitted to the network, making attempts to track Bitcoin users more difficult.
Taproot activation
Permanent activation required 90% of the mining community to mine blocks with Taproot, a recently reached milestone. The blockchain phase is complete, and the Trapcoot update will be activated next November on block 709,632.
History of Taproot
The Taproot update was first proposed in January 2018 by Greg Maxwell, developer of Bitcoin Core. In October 2020, after testing on the Bitcoin testnet, developers released Taproot as a Bitcoin Core library. It is currently considered the most significant enhancement to the Bitcoin protocol in years.
SegWit
Segregated Witness (SegWit) was the upgrade implemented in the Bitcoin network in August 2017, introduced to solve the transaction malleability problem. Segwit made the Lighting network possible, allowing Bitcoin transactions to be faster and cheaper.
Some problems remain
Neutrino, the lightweight client for Bitcoin nodes, presents problems using Taproot within its software. The status report was shared by Olaoluwa Osuntokun, co-founder of Lightning Labs, on the Bitcoin-dev developer mailing list. The email details that developers detected the bug by testing with Neutrino on the Bitcoin testnet. The main error found, according to Osuntokun, is that Neutrino incorrectly filters transactions that use Taproot, marking them invalid.
Taproot and the new Schnorr cryptographic signatures will offer Bitcoin more privacy in its transactions. In networks such as Lightning Network, the protocol running Neutrino, everybody expects to see reduced commissions, even below one satoshi. However, for this scenario to be possible, there are still adoption challenges to overcome, such as the case of nodes.
Bitcoin price and gold
Despite the ongoing comparisons between Bitcoin and gold, Taproot reminds us that Bitcoin is not only a digital currency but also software-based and upgradeable. With the activation of the SegWit upgrade in August 2017, the price of Bitcoin increased by 49.75%. The Taproot upgrade will enable wider adoption, reducing transaction times and costs. Therefore, this upgrade is likely to spark the interest of large corporations.
Analysts expect Taproot’s arrival on the Bitcoin mainnet to impact the cryptocurrency’s price positively. At press time, Bitcoin is hovering around $65,000, reflecting a more than 9% growth in the last week. Market bitcoin’s performance was impressive, with a surge of almost 400% in its price.
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