Bitcoin Taproot Is Live & Here’s What You Should Know

The activation of Bitcoin's Taproot upgrade went live this week. The update comes just as it appeared that Ethereum was about to overtake Bitcoin. Taproot represents the largest update in four years and sets the stage for Bitcoin smart contracts. The upgrade is a big deal for Bitcoin and may maintain its preeminence in the space. So let's take a closer look at this significant upgrade.

Bitcoin, Currency, Technology, Money, Cryptocurrency

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Bitcoin Improvement Proposal (BIP)

You may be wondering how improvements, like Taproot, can be made to a system created by a pseudonymous person like Satoshi Nakamoto. All of the discussion of "hard forks" and "soft forks" can get confusing, which makes understanding BIPs important.

A BIP is a standard for proposing changes to the protocol used by the Bitcoin blockchain. BIPs can lead to a hard fork protocol upgrade when the two blockchains exist side-by-side.. It can also be a soft fork (like Taproot) where the proposed change becomes the standard for the original blockchain as users adopt the new update.

Amir Taaki was the first to submit a Bitcoin Improvement Proposal (BIP) on August 19, 2011. The Python Enhancement Proposal (PEP) heavily influenced the process he outlined.

To get approval, a BIP begins as a draft proposal. Then, improvements are made by the author through community feedback. Finally, the proposal is implemented once the proposal reaches a community consensus.

Now you understand how to make changes to the Bitcoin network, let’s talk about the latest evolution in Taproot.

Taproot Basics

Understanding Taproot begins with the knowledge that it is a combination of many different BIPs and the consensus nature of the update means that it will become the standard as a soft fork. Let’s take a closer look at some of the proposals:

Schnorr Signatures (BIP 40)

  • This is a new form signature makes the signature hash unchangeable, aggregates signatures, increases security using on-chain heuristics, and incorporates batch verification to do bulk verification.
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