The Bitcoin network has successfully completed its first update in over 4 years, since the divisive Segwit update of 2017 that ignited ‘civil war’ in the community.
The Taproot update was installed successfully on Sunday, 14 November 2021. So far there have been no negative incidents and the network is running strong. Unlike the Segwit update, Taproot was almost universally accepted by the entire Bitcoin community.
What does Taproot change?
The Taproot update includes three Bitcoin Improvement Proposals (BIPs) that increase privacy, improve functionality, and reduce fees on the Bitcoin network.
The new Taproot update makes it simpler and easier to create smart contracts on the Bitcoin network. This is significant because Ethereum has long been seen as a more functional alternative to Bitcoin due to its smart contract capabilities.
With the new smart contract capabilities, Bitcoin could pose competition to Ethereum and widen the narrowing gap between the two leading cryptocurrencies. To improve smart contract capabilities, Bitcoin developers have added a new scripting language – TapScript – that fixes several limitations in the previous language.
In addition to TapScript, developers have also introduced Schnorr signatures to replace the old Elliptical Curve (ECDSA) signatures. These signatures make transactions simpler and more private, reducing fees for users and increasing security.
With Schnorr signatures, users can’t distinguish between single signature and multi-sig transactions on the blockchain and can mask the use of Lightning Network transactions. Schnorr signatures also improve scalability by combining multiple signatures into one and improving MuSig2 functionality.
Merkelized Abstract Syntax Tree (MAST)
MAST is a new witness program that reveals only the conditions that have been met when a transaction completes, rather than all conditions. This helps to hide potentially damaging information from prying eyes and allows for more complex spending conditions.
Overall, Taproot greatly improves privacy and security on the Bitcoin network, while making transactions faster and cheaper. It should help developers to build decentralized applications on the network and expand the adoption of Bitcoin.