Taproot activation of Bitcoin is coming
Updated: 2 days ago
Taproot is a proposed Bitcoin protocol upgrade that is going to be deployed as a soft fork. Taproot isn’t extremely controversial, unlike some other soft forks of Bitcoin. During the 2017 SegWit2X proposal, there was vast disagreement in the miner community. The Taproot upgrade is going to boost Bitcoin’s privacy and scalability. The active developers of the Bitcoin community were working with this upgrade for a long time and now the protocol upgrade preparation is almost ready. But every soft or hard fork of Bitcoin is bound to have a drama and this upgrade is also not going to miss that. All major mining pools have already signalled their support for Taproot except Binance Pool. Total hash rate (1-month average) in support of Taproot is now 82.05%. Yes, this is cool.
Image Source - Mining pool support for Taproot
Understanding the privacy concern of Bitcoin
Bitcoin has a public blockchain. All transactions are visible on the blockchain. Anonymous Bitcoin transactions can be achieved by using the coin-mixing technique but the effectivity isn’t very high. If multi-signatures or time-lock feature is used on the Bitcoin network, these get easily detected. If Bitcoin network interacts with a sidechain like Lightening network, the transaction pattern can easily be distinguished. Maintaining any kind of privacy is truly difficult on the network.
The most anticipated update
A soft fork is a change to the blockchain protocol which makes previously valid blocks/transactions invalid. The old nodes recognize the new blocks as valid and make the process forward-compatible. Taproot is a forward-compatible soft fork. It was first proposed by Bitcoin Core contributor and former Blockstream CTO Gregory Maxwell. The upgrade will make Bitcoin’s smart contract more flexible. The upgrade will be performed by combining the Schnorr signature scheme with MAST (Merklized Abstract Syntax Trees) and a new scripting language called Tapscript. It’ll also bring more privacy to Bitcoin by allowing the users to mask complex smart contracts as regular bitcoin transactions. The soft fork will be activated using BIP9, which requires a supermajority of hash power to upgrade. Taproot is the most anticipated update to Bitcoin after SegWit technically.
The possible outcome
Taproot isn’t going to make Bitcoin private but it’s designed to enhance privacy. It can hide multiple transactions as a single transaction. It can hide the ‘running of a script’. Spending Bitcoin using Taproot will hide the fact that the Bitcoin network interacted with Lightening network. Everything will appear as a peer-to-peer transaction only. No, Taproot doesn’t obscure the wallet details of the sender and the receiver but still, it is a win for privacy.
Ahh…and some controversy
Taproot will make usage of Lightning network much cheaper. So, the Lightning fans are obviously pushing for Taproot. Lightning network didn’t get mass adoption due to various issues. As per this report published on Github, introducing one more common address format (P2TR) will lead to disastrous privacy leaks. Bitcoin developer community has already denied any privacy issue related to the fork.
It’s true that Taproot is a bit edgy. It’s not like shielded transactions of Zcash or ring signatures of Monero. Once Taproot is implemented, Taproot coins will be significantly different than normal coins. Taproot can create chaos if 100% adoption isn’t achieved. But it’s also true that Taproot will give various options to carry out Bitcoin transactions. The users will be able to lock up their coins through different ways without being distinguished from each other. Taproot is extending an olive branch of privacy to the holders of Bitcoin. Taproot transactions will also be cheaper and thus provide an additional incentive for mass adoption. Blockchain technology is a happening field. The consensus of the miners indicates that Taproot is happening. Let’s hope for the best.