There are only hours left for another milestone in the history of Bitcoin to be marked, and that is the activation of Taproot, an improvement that implies benefits in terms of privacy, security and streamlining of transactions in the protocol.
Taproot is an update that combines several technologies, its main component being the Schnoor firms. Until now, Bitcoin uses an ECDSA scheme in which a user signs a transaction with their private key to approve the shipment of coins.
In Taproot’s proposed enhancement, Schnoor adds capabilities made to increase the privacy, security, and scale of transactions. Schnoor signatures are linear, allowing for privacy and lighter, more complex smart contracts. Transactions that require multiple signatures they are grouped together, making them cheaper and using less data. While at present, for example, Lightning Network transactions are distinguished in the blockchain from another made in the main network, Taproot offers the possibility that both look the same, improving the privacy of the operation. Taproot would solve the problem of limited space of Bitcoin blocks. By registering one signature representative of several, the amount of data stored in the entire chain is reduced.
Taproot is one of the most important modifications of Bitcoin since the implementation of SegWit in 2017. It will be implemented under the Soft Fork modality, which is a light update. This modality allows that there is no need for controversial discussions that lead to hard forks that originate different versions of Bitcoin.
While the Bitcoin network will continue to function optimally, about half of the Bitcoin nodes are upgrading to Taproot. The rest run the current software and need to be updated to Bitcoin Core version 0.21.1. In the case of miners, 90% of them already indicated that they made the update.
In the case of Wallets, users will not be able to make transactions until their Bitcoin wallet supports it. Developers must write new code for Taproot transactions to become a reality. Although Taproot offers the possibility of more complex uses, developers need to build novel tools. It is likely that in the not too distant future, and thanks to this improvement, a Bitcoin Wallet can be used to host transactions on the mainnet, Lightning Network and even host NFT’s.
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