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Vast majority of cryptocurrency media outlets have been covering the so-called Taproot upgrade. This is one of the most important upgrades in the history of cryptocurrencies, since it has huge implications for the future of Bitcoin. However, it is incredibly difficult to understand what this upgrade means since it is technically challenging, which is one of the reasons why BingX has decided to introduce Taproot to you in very simple way. We have also decided to include sources that will dive deeper into the technological aspects of Taproot for anyone who are interested in learning more.
To put it simply, Taproot is another upgrade of the whole Bitcoin network, known as soft fork. Soft forks are usually just adjustments on the original network that help it to progress and continually improve. And that is exactly what Taproot is meant to do.
Originally proposed by Gregoy Maxwell, Bitcoin core contributor and former executive of Blockcstream, on 23rd of January 2018, Taproot has gone through countless tests, improvements and hurdles before it was finally activated. Being developed for more than 3 years, Taproot had to be first accepted by the miners. This happened on 12th of June, when 90% of miners signalled their preparedness for the Taproot upgrade.
At that time, it was voted that Taproot will be implemented with the block 709 632. This block was mined on Saturday the 14th of November and officially activated and implemented the changes onto the network. But, what exactly are those changes?
Taproot brings to the Bitcoin network two important changes. The first one is Merkelized Abstract Syntaxt Tree (MAST) and the second is Schnorr signatures. Both of these are very complex technological concepts that will be introduced only briefly for the purpose of portraying what they can bring. For a better understanding of these concepts, please follow this link for MAST or this one – Schnorr signatures.
Simply put, MAST introduces a new feature to Bitcoin that it is only necessary to reveal the contract´s specific spending condition used in any given transaction. This means the smart contracts based on Bitcoin will be more efficient and private, since only relevant parts of the contract will be revealed. According to many, MAST will improve the overall programmability of Bitcoin. It should help with smart contract development and may in the future help Bitcoin to compete with smart contracts such as Cardano, Terra, Solana or even Ethereum.
Next improvement that was introduced via Taproot is Schnorr signatures. Some say that Satoshi Nakamoto himself planned to include Schnorr signatures to Bitcoin before it was introduced in 2008, but due to problems with patents, this feature was omitted at that time. However, that is not the case now, since Schnoor signatures are part of Taproot. According to many, this is by far the most important concept introduced by Taproot.
Schnorr signature is an algorithm that allows users to aggregate multi signature transactions into a single transaction. This simply means that it will be much more difficult to track or follow more complicated transactions such as opening of the Lightning Network channel. This not only improves the privacy of the given transactions, but should also lower the transaction costs as well as increase the speed of transactions. It also means that the scalability of the overall network should improve thanks to eliminating the current disadvantages of more complex transactions, such as lower speed or higher transaction costs.
Many believe that Schnorr signatures will mostly help Layer-2 solutions on Bitcoin such as Lightning Network or Liquid. With this upgrade in place, the transactions of Lightning Network or complex multisigs will be treated equally as simple transactions, meaning that it can unlock the true potential of the Lightning Network.
Taproot has been in place for a few days now, but for most of the users nothing has changed so far. This is because it will take time before we can see the benefits of this upgrade. For instance, Pieter Wuille, one of the core developers of Bitcoin, who played a key part in the activation of Taproot, said the following:
“At long last, BIP 341/342 (“Taproot”) are active on Bitcoin mainnet. Thanks to everyone involved for getting us this far. The real work will be in building wallets/protocols that build on top of it to make use of its advantages. I´m very excited to see where that takes us.”
Very bullish sentiment about this upgrade has been spreading around the cryptomarkets for several days now. Alex Gladstein for example stated that Taproot has the potential to increase privacy, flexibility and efficiency of global digital sound money and so far, government officials or bank executives do not even have a clue that it happened. By this he also shows that the future potential of Taproot is yet to be discovered.
However, Taproot also has one immediate effect that some of the followers of cryptocurrencies might completely forget about. That is due to the fact that Taproot once again showed us that Bitcoin is a technology that is constantly being developed and has in its 13 years of life produced incredible impact on numerous sectors.
It is very easy to see this when comparing Bitcoin and gold. Imagine that 13 years ago, around the time that Bitcoin whitepaper was published you put some gold into a vault in your home. If you opened that vault today, the gold is completely the same ( or at least it should be). However, if you look at where Bitcoin was 13 years ago and where it is now, you have to see how much it has grown. And we are not talking about price growth.
We are talking about the whole infrastructure around Bitcoin. The fact that the overall cryptocurrency market valuation is in trillions of dollars. The fact that Bitcoin is the official currency in El Salvador. You see the progress of Bitcoin everywhere, but most importantly its technological growth thus far.
Besides Taproot, Bitcoin has undergone several upgrades such as SegWit or introduction of Lightning Network. LN is now one of the fastest growing sub sectors of the cryptocurrency world, with more than 3 000 BTC locked in the Lightning Network as such. This only shows how much has the technology around Bitcoin improved when compared to gold, which has exactly the same properties, as it had 13 years ago. And Taproot is just another technological advancement that will make Bitcoin easier to use.
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