Bitcoin miners have just signaled for Bitcoin Taproot activation scheduled for November of 2021. If the above sentence made zero sense to you, you’re probably not alone. While the majority of us sees Bitcoin as either Digital Gold, a new asset class, or an extremely risky roll of a dice, it’s ultimately technology riding on software and code. In this article, let’s run through a basic primer on what you need to know about the bitcoin taproot activation.
What is Bitcoin Taproot?
In a nutshell, Taproot is a software update proposal to the Bitcoin network. The upgrade will bring several notable features to the Bitcoin network, including increased privacy, the ability to execute smart contracts, increased scalability and lower transaction fees.
The last update to the Bitcoin network was for SegWit, which was implemented in 2017, and resulted in a hard fork that created Bitcoin Cash. But that’s another story.
What are the features of Bitcoin Taproot?
The Taproot upgrade is actually made up of 3 separate BIP (Bitcoin Improvement Proposals):
- BIP 340 – Schnorr Signatures
- BIP 341 – Taproot
- BIP342 – Tapscript
Collectively, they form the necessary framework, code and scripts required for the network to upgrade. Once implemented, we can expect the Bitcoin Core network to have:
Privacy Benefits
Schnorr Signatures, when live on the Bitcoin Network, will not only allow for a multitude of new transaction types such as multisig and key aggregation contracts, it will retain privacy by making these contracts look exactly the same as simple standard transactions on the blockchain.
This makes diagnosing the complexity of the contracts executed difficult to analyse using on-chain metrics.
Enhanced Security
Schnorr Signatures are also widely believed to be more secure than the existing ECDSA signatures.
Lower Transaction Fees
Taproot transactions typically take up less space on the blockchain, since the transaction details are simplified, and because of that, reduces transaction fees overall, making it cheaper than it currently is.
How are Bitcoin Core updates managed?
To give you a sense of how seriously miners and developers are when it comes to making changes to the Bitcoin core, the proposal for Taproot was first initiated in January 2018!
That’s right. From initial discovery and idea initiation to execution, it took only 4 short years!
In fact, the technology for implementing Taproot was actually made, reviewed, tested and merged to Bitcoin core library since late 2020. However, any changes implemented had to have a majority consensus between the miners distributed globally.
This happened on Jun 12, 2021, after a 90% of blocks signaled for Taproot activation on chain.
When will taproot activate?
Since the code for taproot is already in the Bitcoin core library, all miners need to do now is to ensure they upgrade their software to 0.21.1. Then, at block height 709,632 (sometime in November 2021), taproot will activate automatically.
If you want to dig deeper into the taproot activation, here’s a twitter thread for you to find out more.
Pingback: Crypto in Review – June 2021 | Side Hustle Rich
Pingback: The Proshares Bitcoin Strategy ETF is NOT Disapproved