Many users struggle with the lack of privacy options in Bitcoin transactions. Unfortunately, the original Bitcoin network was supposed to be a trustworthy public ledger, and privacy wasn’t too much of a concern. Even so, traders are still keen to update Bitcoin’s privacy features. That’s why the community voted for Taproot – the latest upgrade that brings privacy features to Bitcoin’s blockchain network.
In this article you can expect:
What does taproot mean?
In general, a root is the deepest and strongest part of a plant. It grows deep into the ground, branches out, and spreads in all directions, making it very difficult to tear up the plant. In terms of crypto, Taproot is an upcoming Bitcoin upgrade that aims to change the entire philosophy and technology behind cryptocurrency. In a sense, it plants roots and holds the Bitcoin network in place, while expanding it at the same time, bringing with it new features in terms of security, scalability and more.
What is Taproot for Bitcoin?
In terms of Bitcoin, Taproot is considered a soft fork. This essentially means that it is a backwards compatible upgrade. Taproot brings new transaction types, security features, and many other types of upgrades. What distinguishes a soft fork from a hard fork is that only a network majority needs to agree to an upgrade for it to take effect. In the case of a hard fork, the entire network must agree, which completely invalidates previous blocks.
Bitcoin is not a private network. Transactions made on the Bitcoin blockchain can basically be viewed by anyone, considering that it is a public ledger. Some crypto enthusiasts are not a fan of this, considering that a big blockchain mantra is anonymity. While there are ways to get around this, these methods are generally tedious and not at all mainstream. Examples include shuffling coins and using Tor. Many believe there should be a more integrated solution. That’s what Taproot is for.
Simply put, the upgrade consists of three parts: Tapscript, Schnorr Signatures, and Taproot itself. The Bitcoin Improvement Proposals (BIP) namely BIP 340, 341 and 342 introduce each of these parts.
As the name makes clear, Schnorr signatures enable several keys to fall into a transaction and a signature to validate them. So when several parties are involved in a transaction, the Schnorr signature hides their involvement and appears as one transaction. Additionally, Schnorr signatures are smaller in byte size than traditional Bitcoin signatures and keys, which means users can save on transaction fees and fit more into a block. Smaller signatures, faster block validations and overall more transactions per second.
Tapscript is a new form of script included in BIP 342, with Bitcoin integration on the horizon. It enables a unique payment method called Pay-to-Taproot (P2TR), which means that users can choose whether they can use a public Schnorr signature or various other means integrated in the network. It gives the user choices, which means that depending on the use case, some transactions can be anonymous while others can remain public. Tapscript validates these newer forms of transaction validity
Taproot is part of BIP 341 which contains the scripts required for proper integration of Tapscript and other signature / key changes. It can also refer to all three script upgrades more generally.
How does Bitcoin benefit from Taproot?
As mentioned earlier, the upgrade will benefit Bitcoin in the following ways:
- Increased privacy in transactions
- Lower transaction fees
- Faster transaction speeds
- Better security
Most of the prominent Bitcoin developers support this network upgrade. That means that implementation is not easy. For Taproot to take effect, the network needs at least 90% of all nodes to agree on the matter. Fortunately for the upgrade, that consensus came about in June 2021.
When does Taproot go live?
Taproot is slated to go live on the Bitcoin network in November this year. The project started in 2018 when Gregory Maxwell, Bitcoin Core developer, presented his idea in an online document. Interestingly, was a security expert Edward Snowden not a fan of the taproot idea, although most of the Bitcoin developers are.
The last time Bitcoin saw such a big update was its Segregated Witness (SegWit) upgrade in 2017. This upgrade was good for the network as it reduced the transaction size to allow more information to fit in blocks. Of course, like most upgrades in any blockchain network, this upgrade had its fair share of negative press.
Revolutionizing Bitcoin Transactions
Taproot appears to be the latest major addition to Bitcoin. The majority of the community is looking forward to this long-awaited update. Assuming everything is going right with the network – and there’s always a chance it doesn’t – then we should expect Taproot to be launched later in 2021.
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