The long-awaited Bitcoin Taproot upgrade has now finally been confirmed by the nodes. For this confirmation, at least 90% of the mining nodes for the Taproot upgrade had to be correct. So this year the first consensus change of Bitcoin since the introduction of Segwit in 2017 is imminent.
Simply put, Taproot is a soft fork for Bitcoin to improve the code to increase privacy and reduce the complexity of transactions.
Strictly speaking, the Taproot upgrade consists of three Bitcoin Improvement Proposals (BIPs), each of which will have three different effects. These include the Schnorr signatures, Taproot itself and Tapscript. The BIPs 340, 341 and 342 are collectively named as Taproot Upgrade.
The BIP 340 includes the Schnorr signatures. The introduction of this is intended to increase privacy and reduce transaction costs. This is due to the savings in storage space for the public keys and the signatures that were previously run via EDCSA (Elliptic Curve Digital Signature Algorithm). With these storage space savings, more transactions can be confirmed in one block, and thus the transaction fees for Bitcoin users decrease.
BIP 341 describes the protocol that must be integrated into the Bitcoin script so that Schnorr signatures are accepted by the system at all.
The BIP 342 integrates several opcodes, i.e. codes that fulfill different functionalities. This implementation makes it possible to carry out P2TR transactions.
The integration of the P2TR (Pay-to-Taproot) makes it possible to increase the data protection of Bitcoin. With Taproot, the code for a smart contract can no longer be distinguished from that of a single transaction.
As of Saturday, June 12th, 2021, over 90% of the mining nodes confirmed the introduction of the Bitcoin Taproot upgrade. This majority of 90% is necessary for the soft fork to be introduced.
On the website Taproot.watch there is an overview showing the number of approvals, rejections, and abstentions from the vote. There it is easy to see that the required 90% has been exceeded and the Taproot upgrade is being introduced.
Some of the largest mining pools have been supporting Taproot for a while. These include AntPool, F2Pool or Slush Pool. The activation of taproot is set for block 709632. This block will likely be confirmed on November 14, 2021.
Bitcoin core developer Pieter Wuille emphasizes the importance of Taproot:
It’s the first consensus change since Segwit was activated in August 2017. It expands Bitcoin’s scripting capabilities in a way that makes certain things cheaper (especially more complex applications like Multisig and Layer 2 things) and a little more private by often using the exact output rules.
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