Taproot upgrade activated on the Bitcoin network

In the Bitcoin blockchain, the Taproot upgrade has been activated, aimed at increasing privacy, efficiency and scalability of the network. The soft fork occurred at block 709,632, mined by the F2Pool mining pool on November 14 at 08:15 Moscow time (MSK).

This is the biggest upgrade to the Bitcoin network since the activation of the SegWit protocol in August 2017. Taproot includes several important technical improvements, the main of which is the implementation of the Schnorr signature scheme and the concept of a MAST.

designed by Blockstream co-founder Gregory Maxwell as far back as 2018. Since then work on BIPs, which became part of the upgrade, has involved Peter Wille, Tim Ruffing, Johnson Lau and other developers.

In June 2021, activation of Taproot was supported by 98% of miners, underscoring its significance for the community. In September, a new version of the popular Bitcoin Core client (v 22.0) was released, in which the update support was implemented.

MAST will improve the efficiency of data processing. The construction contemplates generating separate hashes for each spending condition and subsequently incorporating them into a Merkle tree, which in turn yields a single hash or the so-called Merkle root.

In the context of Taproot, this concept also includes the presence of a condition that allows all participants to work together to execute a spend: the so-called “cooperative spending”.

Until recently the Bitcoin blockchain relied exclusively on signatures based on the cryptographic scheme ECDSA. The Schnorr signature scheme’s implementation in the protocol will allow aggregating multiple signatures for a single transaction into a single one due to the linear mathematics behind it.

This approach can be applied to multi-signature transactions — these transfers can be made indistinguishable from ordinary ones. For example, private Lightning Network transactions, easily identifiable on the network, can now look like standard ones.

The soft fork could reduce network fees, since multi-signature transactions will cost less due to using a smaller data footprint. It will also give developers an expanded toolkit for creating new solutions.

As of writing, slightly more than half of the nodes (52.88%) in the Bitcoin network have supported the upgrade. The rest run legacy software and therefore do not have access to the new features.

The impact of the soft fork on the price of the first cryptocurrency has been minimal. The asset is trading near $64,800, up 1.6% on the day.

Not everyone in the community believes the upgrade will benefit Bitcoin. Some argue that the update presents a potential privacy threat.

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