Real-world use cases are one of the main drivers for the adoption of any crypto ecosystem, which is also true for the Bitcoin Network (BTC). Over the next seven days, the Bitcoin protocol will go through a soft fork on behalf of the Taproot upgrade, which aims to improve the privacy, efficiency and smart contracts capability of the network.
Taproot is the first major upgrade of Bitcoin since August 2017 that introduced Segregated Witness (SegWit) and introduced Lightning Network. While the previous fork was primarily aimed at fixing the malleability of transactions and improving Bitcoin’s network scalability, the Taproot upgrade is aimed at overhauling transaction efficiency, privacy, and support for smart contracts initiatives.
The Taproot upgrade was set for deployment after reaching 90% consensus among Bitcoin miners (mining nodes). On the same day in June 2021, Bitcoin developer Hampus Sjöberg tweeted the announcement:
WE’VE INCLUDED! #Bitcoin #Taproot
Video by: @TheGuySwann! Https: //t.co/rCUp5VNCBX pic.twitter.com/YFLMTenWW0
– Hampus Sjöberg ⚡ (@hampus_s) June 12, 2021
The Taproot Softfork will introduce the Merkelized Abstract Syntax Tree (MAST), which introduces a condition that enables the sender and recipient to sign a settlement transaction together.
Additionally, Taproot will also implement Schnorr Signature, an algorithm that allows users to combine multiple signatures into a single one for a single transaction, reducing the inherent visible difference between regular and multisig transactions.
Schnorr’s signature scheme can also be used to alter the user’s private and public keys in a way that is verifiable to confirm the legitimacy of each transaction. According to Gregory Maxwell’s January 2018 original Taproot proposal:
“I believe this construction will allow the greatest possible anonymity for smart contracts with fixed parties by making them look like the easiest payments possible. It usually achieves this without overhead, uses sketchy or impractical techniques, requires additional rounds of interaction between the contracting parties and without the permanent storage of other data. “
At the time of writing, Taproot.Watch, a website created by Sjöberg, shows that the Taproot upgrade will be activated on November 14th after 1020 blocks have been successfully minted.
Related: Bitcoin network tags record high for daily settlement volume
Just last month, the Bitcoin network’s daily billing value hit an all-time high after processing on-chain transactions valued at $ 31 billion.
Compared to early 2020, the network’s daily processing volume has increased 40-fold, aided by the mainstream introduction of Bitcoin in El Salvador and other jurisdictions.
Last week, $ 31 billion was processed on the Bitcoin network in a single day.
This is an all-time high for a single billing value.
The global, decentralized payment system is becoming more and more dominant. (h / t @kerooke) pic.twitter.com/a6Q2FbPY3C
– Pomp (@APompliano) October 10, 2021
“[The Bitcoin network is] currently about $ 190,000 per second. Compare that to $ 130,000 per second for Visa for US customers and $ 55,000 per second for Mastercard, ”said on-chain analyst Willy Woo.