According to data from Taproot.watch, Bitcoin will undergo a major network update on November 14, Taproot. This is the first significant update since Segregated Witness (SegWit), which eventually led to the development and launch of the Lightning Network in 2018. The first Taproot proposal was presented by Bitcoin mainstream contributor and former Blockstream Learning Lead Gregory Maxwell on January 23rd. 2018.
While the previous SegWit update aimed to address transaction scalability and improve the scalability of the Bitcoin network, the Taproot update aims to improve transaction efficiency, network privacy and its ability to support smart contract initiatives. The update only started after 90% consensus was reached among Bitcoin mining nodes on June 12, Bitcoin developer Hampus Sjöberg said on Twitter. Sjöberg has also set up an update tracking website Taproot.watch for your Taproot update.
Ben Kaslin, head of research and strategy at AAX, a cryptocurrency exchange, told Cointelegraph: “The upcoming Taproot upgrade to Bitcoin is one of the most important changes in the network. The update adds smart contract functionality to the protocol and improves cost-effectiveness and privacy. ”
He also noted that the functionality of smart contracts coming into Bitcoin is important despite the fact that there are already many high-performance protocols out there, saying: “We must remember that Bitcoin is the only non-sovereign network that offers the highest level of networking. “safety. on the planet.”
MAST and Schnorr. signatures
The soft fork will introduce the Merkelized Abstract Structure Tree (MAST). This tree will provide a condition that allows the sender and recipient of the transaction to sign the transaction together for settlement. Merkle Trees is a complex and compact data structure created by Ralph Merkle, one of the inventors of public key cryptography.
Bitcoin currently uses Pay for Script Hash (P2SH), which ensures that only script hashes are executed. When you use tokens, the underlying technology forces you to view all possible conditions that can be met, including those that were not met in the transaction. The disadvantage of this is that it is very data heavy, which is neither necessary nor ideal for privacy, as everyone on the blockchain can investigate how money can be used, what type of wallet is used and possibly other such details.
MAST ensures that the various circumstances in which money can be used individually are hashed and included in the Merkle tree, which will create the Merkle root, a single hash. This ensures that only the conditions that are met are identified, which makes the network more efficient than previously used P2SH contracts.
The taproot update will also give Schnorr’s signature. This algorithm will allow users to group multisiggs into one for a single transaction, making it difficult to distinguish between regular and multiple transactions. It essentially hides these signatures if an existing MAST token or transaction structure exists at any given time.
Igneus Terrenus, head of communications for Bybit, a cryptocurrency derivative exchange, told Cointelegraph about the details of this update:
“Using the trinity of Schnorr signatures, MAST and Tapscript, Taproot allows less unnecessary data to be collected in the transaction output of the Bitcoin network without compromising security. Unless data is collected and transferred, the benefits to end users will be translated for more privacy, more efficiency and lower transaction fees. ”
Terrenus also mentioned that the Taproot update will have an impact on Lightning Network, which was launched back in 2018. After this minor separation, simple and complex multi-signal transactions and Lightning Network will be treated equally across the network. This will unleash the true potential of the Lightning Network by improving efficiency and reducing switch discrimination.
Marie Tateboit, marketing manager at Gate.io, told Cointelegraph about the biggest impact Lightning Network has already had, especially since El Salvador used bitcoin as a legal tender. She said: “Strike, one of the most well-known Lightning Network wallets, is responsible for operating the crypto ecosystem in El Salvador. During the three-month period from May to July 2021, the number of Lightning Network nodes jumped from 10,000 to 23,000. In the current situation, Lightning Network is expected to reach 700 million users by 2030. ”
Although the update will make it possible to distribute smart contracts and is the next logical update for the Bitcoin network, it would be unrealistic to compete with the most widely used smart contract blockchain network, Ethereum, ie.