The Bitcoin Taproot upgrade, a major advancement since Segregated Witness (SegWit) in 2017, enhances network privacy and efficiency. It was set in motion on November 14, 2021, after a miner consensus in June. Its six-month lead-up ensured widespread adoption. Taproot fuels smart contract integration, trimming intermediaries from transactions, and paving the way for decentralized finance (DeFi). This upgrade brings notable changes to the Bitcoin protocol, promising enduring benefits.

What is Bitcoin Taproot?

Taproot is a significant upgrade to the Bitcoin protocol that enhances privacy, efficiency, and functionality. It was activated in November 2021 through a soft fork. The primary goal of Taproot is to improve the scripting capabilities of Bitcoin’s smart contracts while also enhancing the privacy of complex transactions.

In simpler terms, Taproot allows multiple conditions to be bundled into a single transaction, making it more private and efficient. It does this by making all possible conditions of a transaction look the same on the blockchain, effectively hiding the specific conditions that were not chosen. This makes Bitcoin transactions appear more uniform and less distinguishable, thus increasing privacy.

Features of the Taproot Upgrade

The Taproot upgrade for Bitcoin introduces three key features:

• Schnorr Signatures (BIP340): Schnorr Signatures improve transaction validation speed and security. They create shorter, aggregated signatures from multiple keys within a complex transaction, reducing transaction time. This upgrade also enhances privacy by making transactions appear as peer-to-peer interactions, although wallet addresses remain visible.
• Tapscript (BIP342): Tapscript is an upgraded coding language for Bitcoin scripting. It leverages Schnorr Signature aggregation to increase block space efficiency. This enhancement brings greater flexibility to the network, enabling new features like smart contracts.
• Taproot (BIP341): Utilizing the Merkelized Alternative Script Tree (MAST), Taproot optimizes transaction data storage on the blockchain. It replaces complex transaction details with the executed conditions, reducing data volume and improving transaction speed. This enhances both privacy and scalability.

I covered the story ahead at: https://news.todayq.com/bitcoin-taproot-upgrade-and-how-will-it-benefit-bitcoin/