Bitcoin Core Project just released Bitcoin Core 22.0. The update is currently available on the Bitcoin Core website. Here is what you need to know about the upgrade, called Taproot.
What is the Taproot Bitcoin Upgrade?
The Bitcoin Taproot upgrade brings a new layer of anonymity to Bitcoin. It is a soft-fork network upgrade that uses the Schnorr signature created by Claus P. Schnorr. Currently, the network uses the Elliptical Curve Digital Signature Algorithm (ECDSA) signature method. ECDSA was more secure and widely in use at the time Satoshi Nakamoto created Bitcoin.
Through the upgrade, anonymity increases because the multi-signatures (multi-sigs) are combined into a single identifier.
What does Taproot Upgrade Mean for the Bitcoin Network?
Taproot upgrade enables transactions to use multiple features and functions while not disclosing their true form on the blockchain. Many decentralized networks have been built on top of the Bitcoin blockchain. Examples include the Lightning Network, the RSK, and other peer-to-peer networks for trading.
Currently, the Lightning Network, Peer-to-Peer (p2p) networks, and the RSK Network transactions all possess different signatures. By analyzing a transaction, you can be able to determine the form of a Bitcoin transaction. Additionally, you can narrow down the list of possible parties involved in the transaction.
With Taproot, all these different forms of transactions will look the same on blockchain explorers. Furthermore, Taproot will help with scalability, increasing transaction speeds by at least 20%. Savings can also increase if most of the transactions use multi-sigs. By relieving the network of congestion, the transaction fees reduce and increase the network throughput. According to YCharts, Bitcoin transaction prices currently range between $2.40 and $2.60. with Taproot, these prices can go even lower.
Will there be Another Bitcoin Fork Coin Because of the Upgrade?
As of May 2021, Bitcoin miners could vote on the upgrade by sending unique data (Signal Bits) on blocks. This adjustment period or the Speedy Trial Phase ran for three months ending August. Taproot would go live before the end of the year if 90% of the blocks included the Signal Bits.
Taproot upgrades will now automatically get activated when Bitcoin block height reaches 709,632. That will be around mid-November 2021. After the activation, all nodes and devices that have downloaded and installed the Taproot update will make transactions on the Bitcoin network using the new protocol.
Therefore, there will be no Bitcoin fork coins like Bitcoin Cash (BCH) or Bitcoin Satoshi’s Vision (BSV) after this upgrade. Such forks arise when there is a divide between different parties (usually miners and developers). When miners feel that a new update will not be beneficial to them, they can fork the old code of the project to create a new one that favors them. Fortunately, that is not the case for Taproot.
What the Upgrade Promises
The road ahead is promising. The Taproot will make Bitcoin shine once more. Fast speeds, extremely low fees will attract activity back to Bitcoin, increasing adoption. For years now, Ethereum has stolen the show. Maybe Taproot is the long-awaited game change.