The Bitcoin network has received a major technical upgrade known as Taproot, which is the network’s most significant update since 2017. The latest version went live on November 14 and will let developers implement new features that will improve the Bitcoin network’s privacy, scalability, and security. Since June, when over 90% of miners elected to “signal” their support, the update has been anticipated.
Between the lock-in and the activation date, a waiting time was established. This time period has allowed node operators to update to the most recent version of Bitcoin Core, 21.1, which includes the merged code for Taproot.
The update is the first substantial change to the network’s code since the introduction of Segregated Witness, or SegWit, in 2017, which addressed network scaling difficulties. Taproot is the culmination of a series of technological advances over the years bundled into one significant overhaul, which has received widespread community support since its conception.
The inclusion of Schnorr signatures, one of the primary features of the Taproot upgrade, allows for more sophisticated transactions on the Bitcoin network.
Until now, the Bitcoin network’s cryptographic architecture had been ECDSA, or Elliptic Curve Digital Signature Algorithm, with users signing transactions with their private keys to authorize them. Taproot employs the Schnorr scheme with linear signatures, which is quicker and smaller than ECDSA.
Transactions from multi-signature wallets will now seem to be just like any other transaction, boosting transaction privacy and security. This will ultimately allow smart contracts to be created, eliminating the need for middlemen and bringing Bitcoin’s network up to speed with Ethereum, which already has smart contracts built-in.
While Taproot’s potential is enormous, the enhancement will take some time to completely take effect. Users won’t be able to send or receive the new transactions until their Bitcoin wallet supports them. This may take some time because most wallets do not currently support it. Bitcoin’s most recent big update, SegWit, took nearly two years to reach 50% adoption.
According to a Coindesk analysis, just around half of the known Bitcoin nodes have shown support for the update thus far. The others are still using an earlier version of Bitcoin Core, which means they won’t be able to implement Taproot’s new restrictions until they update to Bitcoin Core 21.1.