Bitcoin’s upcoming Taproot upgrade and its importance to the network

Although the vast majority of cryptocurrency enthusiasts around the world seem to be interested in Ether (ETH) How the current and upcoming London hard fork will push the value of the prime minister’s altcoin even higher. Recently, reports have surfaced, indicating the long-awaited Bitcoin Taproot upgrade will be online It’s also sometime at the end of this year.

In this regard, many bitcoins (Bitcoin) The mining pool seems to have Send signal Their support for activation and data provided on Taproot.watch, a website designed by core Bitcoin developer Hampus Sjöberg, show that Taproot signals currently account for approximately 56% of BTC’s total hash power.

It should be mentioned that the two largest Bitcoin mining pools calculated by hash rate are the main ones supporter Perform this upgrade from the beginning.Even other relatively large mining operators, such as Foundry USA and Slush Pool, also have expression Their support for activation.

What exactly is Taproot?

In the most basic sense, Taproot can be seen as the latest step in the evolution of Bitcoin, because the upgrade is not only for Enhance the overall availability of the network By making transactions cheaper, faster and easier to deploy, it ultimately also allows smart contracts to be deployed.

In addition, Taproot also made important privacy commitments-namely, it tries to make all transactions except the two parties the same for everyone. This potential camouflage-based framework seems to be inspired by the security-centric encryption products on the market today, so, at least from a design point of view, it potentially brings Bitcoin closer to some privacy-focused coins.

Regarding this issue, Antoni Trenchev, the co-founder and managing partner of the cryptocurrency lending platform Nexo, told Cointelegraph that the proposed Taproot update proves the decentralized nature of Bitcoin and that the network is always seeking improvements and development. He also believes that this upgrade reminds investors that unlike gold, Bitcoin is a dynamic store of value in all aspects, adding:

“All these recognized major improvements have laid the foundation for wider Bitcoin adoption and continued price increases. All in all, Taproot is one of BTC’s most anticipated updates since its block size upgrade in 2018.”

Joel Edgerton, chief operating officer of cryptocurrency exchange bitFlyer USA, told Cointelegraph that although most people in the current cryptocurrency community seem to be focused on Bitcoin’s price action, what they ignore is the fact that the underlying technology of BTC is actually it. For the value it provides, Taproot is an important development for several reasons:

“First, it reduces the size of transaction data, which can reduce transaction fees for complex transactions. In addition, it makes multi-signature and time-locked wallets difficult to distinguish from simple single-symbol wallets, thereby increasing privacy while also allowing development People use vault logic, which increases the functionality of the wallet.”

In Edgerton’s view, Taproot is a testament to the maturity of the Bitcoin community and how everyone seems to have learned valuable lessons from the 2017 Bitcoin upgrade war – namely, by using decentralized, community-based voting to plan and implement upgrades to Important.

As early as 2017, Bitcoin experienced a difficult fork, which created a new cryptocurrency called Bitcoin Cash (Biosafety Information Clearing House). Although the process is very simple, the period before the difficult fork is full of disputes, and many core community members are in conflict with each other.

Technical failure

On the surface, Taproot is an elegant engineering solution that is designed with a reliable encryption foundation and can help make some improvements to the Bitcoin protocol.

Lior Yaffe, CEO of blockchain software company Jelurida, pointed out to Cointelegraph that by combining Schnorr signatures and Merkelized abstract syntax trees, or MAST, Taproot is able to transform the representation of complex bitcoin transactions, such as multi-signature transactions and used transactions. Setting up a lightning channel looks like a regular Bitcoin transaction when it is submitted on the chain.

In cryptography, Schnorr signatures are easy to “prove fairness” and are functionally superior to conventional logarithmic signatures, while traditional logarithmic signatures usually encounter problems related to intractability. Similarly, MAST is a unique digital product that allows the deployment of various user-selected conditions that must be used to use a large number of bitcoins.

Overall, this reduces storage space and can indirectly reduce the costs of these types of transactions. Similarly, in the long run, when its use becomes widespread, Taproot may be able to significantly improve the privacy of Lightning and multi-signature users. Yaffe added: “From an ecosystem perspective, I think Taproot is a comprehensive attempt by Bitcoin developers and the community to ultimately make the Lighting network a mainstream payment platform.”

How will Taproot affect BTC?

Another aspect of the upgrade proposal that is worth considering is whether Taproot will have a significant impact on Bitcoin’s future price movements. In this regard, Edgerton believes that activation will not have any short-term impact on the value of Bitcoin. But he does believe that this update will bring “behind the scenes” changes, which will make the Bitcoin network more powerful and more competitive.

Yaffe believes that in the long run, improving the adoption of the Lightning network (that is, by reducing transaction fees and settlement time) will make Bitcoin and its ecosystem a relevant payment method in the Internet era, and further increase:

“Given the recent surge in the price of Bitcoin, which is more attributable to its potential store of value and adoption by institutional investors, I don’t think Taproot will have any meaningful impact on short-term prices.”

Finally, Siddharth Menon, co-founder and chief operating officer of the cryptocurrency exchange WazirX, told Cointelegraph that since 2010, people have been looking forward to the latest Taproot upgrade and are expected to have a positive impact on the currency. He added: “This kind of network is slowly but steadily getting better and better every day.”

Other important aspects of Taproot are worth considering

According to the consensus of the Bitcoin community, the above Taproot activation Will only be given a green light If 90% of all mined blocks contain activation signals within the difficulty adjustment window (2,016 blocks). More specifically, the consensus agreement needs to be reached within one of the difficult periods from now to August 11 so that the network upgrade can proceed in November as planned.

As of May 7, a total of 327 signaling blocks appeared in the current window, and the miners responsible for 610 blocks chose not to include the “signal bit”. The “no” votes of these miners currently account for 30% of the 2,016 blocks in the current difficulty window. So far, some of the pools that have opposed voting include big names such as Poolin, Binance Pool, BTC.com, viaBTC and HuobiBTC.