The Bitcoin network recently underwent a major technology update called Taproot, the biggest network update since 2017. The new update was activated on November 14 and will allow developers to incorporate new features into Bitcoin that provide better privacy, enable scalability and security.
The network is expected to be upgraded in June when more than 90 percent of miners have voted to “signal” their support. After that, a waiting period begins between lockout and activation date. This period gives node operators the time needed to update to the latest version of Bitcoin Core 21.1 – the version that contains the combined Taproot code.
Subsequent updates to Segregated Witness or SegWit (which were introduced in 2017) are the first major improvements to the network code to address network scalability issues. Taproot, which has received universal support from the community since its inception, is a combination of several technical fixes that has become a major improvement.
One of the most important features of the Taproot update is the recognition of Schnorr signatures, which enable more complex transactions on the Bitcoin network.
Previously, the cryptographic framework used by the Bitcoin network was ECDSA, an acronym for the elliptical curve digital signature algorithm that allows users to sign transactions with their private keys. Taproot uses the Schnorr scheme, which is faster and shorter than ECDSA, with a linear signature.
With the new upgrade, transactions in multi-signature wallets will look like any other transaction, increasing the confidentiality and security of transactions. This will eventually pave the way for smart contracts, eliminate the need for intermediaries, and speed up the Bitcoin network with Ethereum preferences, enabling smart contracts to be created.
While Taproot’s capabilities are immense, it will take some time for the upgrade to be fully implemented. Users cannot send or receive new transactions unless the Bitcoin wallet they are using supports it.
This can take some time as most wallets currently do not support this. The latest major Bitcoin upgrade, SegWit, took almost two years to reach 50 percent uptake.
The Coindesk report shows that so far only more than half of known Bitcoin nodes are signaling support for the upgrade. The rest are still on older versions of the software, which means they haven’t been able to implement the new Taproot rules – at least not until they upgrade to Bitcoin Core 21.1.