Reports said that the Bitcoin protocol will undergo a soft fork in the name of the Taproot upgrade, which aims to improve the network’s privacy, efficiency, and smart contracts capability.
It has been reported that Taproot is Bitcoin’s first major upgrade since August 2017, which saw the introduction of Segregated Witness (SegWit) and resulted in the launch of Lightning Network. While the previous fork primarily sought to fix transaction malleability and improve Bitcoin’s network scalability, the Taproot upgrade aims to revamp transaction efficiency, privacy and support smart contracts initiatives.
However, the Taproot upgrade was set for deployment after achieving a 90% consensus among the Bitcoin miners (mining nodes).
On the same day in June 2021, Bitcoin developer Hampus Sjöberg tweeted:
The report said that the Taproot soft fork will see the introduction of Merkelized Abstract Syntax Tree (MAST), which introduces a condition that allows the sender and receiver to sign off on a settlement transaction together.
Likewise, Taproot will also implement Schnorr Signature, an algorithm that will allow users to aggregate multiple signatures into one for a single transaction, reducing the inherent visible difference between regular and multisig transactions. Schnorr’s signature scheme can also be used to modify the user’s private and public keys, in a manner that can be verifiable to confirm the legitimacy of each transaction.
According to the original Taproot proposal from January 2018 put forth by Gregory Maxwell:
“I believe this construction will allow the largest possible anonymity set for fixed party smart contracts by making them look like the simplest possible payments. It accomplishes this without any overhead in the common case, invoking any sketchy or impractical techniques, requiring extra rounds of interaction between contract participants, and without requiring the durable storage of other data.”
As of November 7, Taproot.Watch, a website built by Sjöberg, shows that the Taproot upgrade will be activated on Nov. 14th after successfully minting 1020 blocks. Last month, the Bitcoin network’s daily settlement value hit an all-time high after settling $31 billion worth of on-chain transactions.
Thus, On-chain analyst Willy Woo said:
“[The Bitcoin network is] presently doing ~$190k per second. Compare this to $130k per second by Visa for US customers and $55k per second for Mastercard.”