In recent weeks, the Bitcoin network has undergone a major technical update known as Taproot, which is the network’s most significant update since 2017. The new upgrade, which was triggered on November 14, will let developers add new features into the Bitcoin network, allowing for improvements in privacy, scalability, and security.
The new update will be available for download here. Since June, when more than 90 per cent of miners elected to “signal” their support for the update, the upgrade has been widely expected. A waiting period was therefore established between the time of lock-in and the time of activation. This interval has provided the node operators with the necessary time to update to the most recent version of Bitcoin Core, 21.1 — the one that contains the merged code for the Taproot project.
The update is the first big change to the network’s code since the introduction of Segregated Witness, often known as SegWit, in 2017. SegWit was designed to address difficulties with the network’s scalability, and this is the first substantial upgrade since then. Known as Taproot, it is the culmination of a variety of technological advancements made over the years and wrapped into a single significant upgrade that has received unanimous approval from the community since its conception.
One of the most significant features of the Taproot upgrade is the addition of Schnorr signatures, which allows for the execution of more complicated transactions on the Bitcoin network. Until recently, the cryptographic foundation utilised by the Bitcoin network was ECDSA, which is an abbreviation for Elliptic Curve Digital Signature Algorithm, with users signing a transaction with their private key to indicate their approval. Taproot employs the Schnorr scheme, which is both quicker and smaller than the ECDSA scheme, and it also employs linear signatures.
Transactions from multi-signature wallets would seem to be identical to any other transaction after the update, hence increasing the anonymity and security of the transactions. In the long run, this will open the way for the creation of smart contracts, eliminating the need for intermediaries and bringing Bitcoin’s network up to speed with the likes of Ethereum, which already supports smart contracts by design.
It will take some time before the full benefits of Taproot are realised, despite its enormous potential. Users will also be unable to send or receive new transactions until the Bitcoin wallet that they are currently using has been updated to handle the new transactions. Due to the fact that most wallets do not now support it, this might take along. It took over two years for Bitcoin’s most recent big update, SegWit, to reach acceptable levels of 50 per cent in the real world.
Currently, just slightly more than half of the known Bitcoin nodes have shown support for the update, according to a Coindesk analysis. Most of the rest of the network is still on an older version of the software, which means they will not be able to enforce the new Taproot rules until they upgrade to Bitcoin Core 21.1, which is expected to happen soon.
