It is the first major Bitcoin update in four years. Despite being the most popular cryptocurrency in the world, during this time we had not seen any improvement. That will change next November, when Taproot is scheduled to go into effect, an update for Bitcoin that promises a leap in privacy and transaction efficiency.
It was in 2015 when Segwit (Segregated Witness) was proposed, a slight variation of Bitcoin that allowed to “relax” the network load. This year another one of these ‘soft work’ updates will come into action. Taproot has been accepted these days by the Bitcoin community and will come with important changes. We explain what they consist of.
As Pieter Wuille, one of the developers of the Bitcoin core describes: “activation is automatic at the height of block 709632; expected around November 14, 2021. Taproot is the first consensus change since Segwit went live in August 2017. ”
What changes in Bitcoin with Taproot
The main change in Bitcoin is related to the digital footprint that each person leaves in the transaction. Starting in November, the Schnorr firms will be switched, which allow make multi-signature transactions unreadable.
Currently Bitcoin uses a digital signature algorithm created from the private key, the unique sequence related to each transaction. Being blockchain-based and public, anyone can monitor that transaction. Now from Bitcoin they seek to improve privacy with P2SH and MAST.
Taproot will allow you to “hide” the moving and added parts of a multiple transaction to make them look like a single transaction. That is, in complex operations, the information will be unified under the same identifier, which will allow add more privacy in some respects while keeping the reference public.
The update promises an improvement in efficiency by reduce the amount of data to be transferred and stored on the blockchain. That is, the information in each block will be better compressed. There will also be a higher rate of transactions per block, which will ultimately lead to lower transaction fees.
At the time there were so many ideas even for “structural” Script improvements (not counting ideas for new opcodes); there was cross-input signature aggregation, graftroot, g’root, of course Taproot itself, …
Initially my hope was to create one proposal that did all of them.
— Pieter Wuille (@pwuille) June 12, 2021
At the security level, signatures will no longer be “malleable”. At this time it is technically possible to modify the signature before the transaction is confirmed, exposing it to possible attacks. With Taproot, this will change which will add one more layer of security to Bitcoin.
Approaching Ethereum with ‘smart contracts’
Smart contracts are scripts, codes associated with money. The basis for creating blockchain-based applications and tools. Here despite the fact that Bitcoin is the most popular cryptocurrency, in this field Ethereum and its future version 2.0 have an advantage.
Bitcoin wants to cut this difference. With the improvement in efficiency of the blocks, Bitcoin wants to improve its potential in the world of decentralized finance (DeFi). A position that is now a long way from, where most experts agree that Bitcoin requires too many resources and time to implement these ‘smart contracts’.
The world of cryptocurrencies is moving at a hellish pace. Fortunately, the advances and movements are not only coming from the financial side, there is also a great work in the technology behind it.
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