A long-awaited upgrade to the Bitcoin network is finally here. The new protocol, Taproot, preserves privacy on the Bitcoin blockchain by obscuring complicated transactions. It also makes them cheaper and more lightweight.
The upgrade, which was locked in on June 12, is seven years in the making. It combines complex transactions with simple ones without bulking out the blockchain.
Taproot does this by replacing Bitcoin’s current signature protocol with Schnorr signatures. These are faster signatures that boost Bitcoin’s transaction privacy and make it easier to implement lightweight smart contracts.
This is, provisionally, good for Bitcoin. It will make multi-signature transactions, which require several signatories to okay a transaction at once, cheaper and easier to execute. Making better use of Bitcoin’s finite space makes the blockchain more scalable, too.
Taproot is the most significant upgrade to Bitcoin since SegWit in 2017. SegWit fixed a host of bugs, allowed for more transactions to be stuffed in each block and laid the groundwork for Layer 2 payment channels, such as Lightning.
Today’s upgrade signals a mostly behind-the-scenes change for now. The march to today was kicked off when Taproot was activated in June; then, the network instigated a waiting period for all nodes to upgrade to the newest version of Bitcoin Core.
But as with all things on Bitcoin, the upgrades are meaningless unless a community makes use of them. Now it’s up to developers to build on Taproot.