A new Bitcoin (BTC) fork called ‘Taproot’ is expected to activate tomorrow. It’s the culmination of about four years of work for three different Bitcoin Improvement Protocols (BIPs) that essentially represent an upgrade to Bitcoin’s underlying blockchain software:
- BIP-340 : Improved security by adding Schnorr Signatures
- BIP-341 : Cheaper transactions through Merkle branches (or MAST)
- BIP-342 : More privacy and smart contract capability
What is this fork about?
An idea birthed in 2018 at a diner in Los Altos, the Taproot Bitcoin fork packs the three new BIP features together to improve the blockchain’s security, reduce transaction costs, and enhance functionality through smart contracts.
The idea was formalized in June 2021, when the Bitcoin community voted for the three features to be implemented in what is called the “Taproot Fork.”
Bitcoin’s latest makeover trifecta offers the following benefits:
Increased Security & Privacy
The addition of Schnorr Signatures through Bitcoin Improvement Proposal 340 (BIP-340) provides a faster, leaner, and more secure way to authorize transactions. By enabling the recording of a single aggregated public key and a single aggregated signature for multi-signature transactions—a technique known as “key aggregation”—BIP-340 results in a lighter blockchain load. It also makes it impossible for observers to determine whether a transaction includes single or multiple endorsers, providing further privacy as Bitcoin’s popularity grows.
Cheaper Bitcoin Transactions
Taproot is the first major upgrade to Bitcoin’s underlying code since the Segwit Fork went live in 2017. It extends Segwit’s privacy features for smart contracts through the addition of a system called MAST (Merkelized Abstract Syntax Tree), which is based on a tried-and-true, decades-old cryptographic data structure. MAST condenses transactions into a single script on the blockchain, reducing the amount of data required to complete the transaction and ultimately resulting in lower transaction fees.
Enhanced Smart Contract Functionality
The three BIPs were designed to be hand-in-hand, each complementing and supporting the other. In that vein, Bitcoin Improvement Proposal 342 (BIP 342) plays a pivotal role: it describes Tapscript, the scripting language necessary to enable the new transaction types featured in the Taproot update. Essentially, it is an upgradable feature that makes the efficiency improvements offered by Schnorr Signatures fully accessible.
What does this fork mean for Jaxx Liberty users?
We have updated our Bitcoin nodes to the latest blockchain software (0.21.1) to support the upcoming fork and ensure Jaxx Liberty users continued and uninterrupted use of their wallets. We will also closely monitor the fork implementation when it goes live to verify Jaxx Liberty wallet’s continued service.
Though there may not be an immediate visible advantage to wallet users out there, this upgrade paves the way for future Bitcoin blockchain improvements, more security and privacy, and additional functionality through smart contracts—currently a popular feature of the Ethereum Network.
Often, when a blockchain has a hard fork, the event is associated with the birth of a new digital asset. The Taproot fork has reached network consensus and therefore will not be creating any additional blockchains. There will be no new (mirrored) digital assets created following this hard fork.
Taproot countdown: taproot.watch