- The much-anticipated Bitcoin update Taproot is poised to go into effect in 761 blocks, or an estimated 5 days.
- The update will enhance transaction privacy and efficiency for Bitcoin.
- Developers are generally optimistic about Taproot.
The much-awaited Bitcoin upgrade Taproot finally received more than 90% support from miners in its third signaling round. The update, once deployed, will enhance transaction privacy and efficiency for Bitcoin, something that will attract people who value security.
According to live data by taproot.watch, at the time of writing, the upgrade is slated to go into effect in 761 more blocks, or in an estimated 5 days. However, according to the most recent data, not all miners have updated their nodes. Most recently, Bitcoin node Taproot support was at 48.87%, as per data by Taproot Signal.
Bitcoin Node Taproot Support: 48.87%
Unknown: 705 pic.twitter.com/6fJ3ednD9l
— Taproot Signal (@taproot_signal) November 8, 2021
What is Taproot and Why is it Important?
Gregory Maxwell, Bitcoin core contributor and former chief technology officer at Blockstream, first introduced the update with the aim to enhance Bitcoin’s smart contract capabilities and increase its privacy. Here are the three main benefits Taproot would bring to Bitcoin:
- Lower fees for multisig/complex transactions – Taproot will significantly reduce the transaction data size for making complex Bitcoin transactions like those involving multiple signatures or time-locking. Consequently, this will reduce the transaction fee costs.
- Security and privacy benefits – Taproot will enable users to mix single-signature transactions with those made by complex (multisig or time-locking) transactions, making it more difficult to trace. Moreover, the update will remove the malleability feature of the signatures, making it impossible to modify the signature of a transaction before it is verified.
- Increased wallet and smart contract functionality – The upgrade will allow developers to insert more complex conditions for wallets.
These perks have convinced almost all developers that Taproot will benefit Bitcoin. “Taproot matters, because it opens a breadth of opportunity for entrepreneurs interested in expanding bitcoin’s utility,” said Alyse Killeen, founder and managing partner at Stillmark, a bitcoin-focused venture.
Fred Thiel, CEO at Marathon Digital Holdings, said the main benefit of the update is that it increases smart contract functionality. “The most important thing for Taproot is…smart contracts. It’s already the primary driver of innovation on the ethereum network. Smart contracts essentially give you the opportunity to really build applications and businesses on the blockchain,” he said.
Jimmy Song, a Bitcoin developer, said the update will lure people who appreciate the value of security. “I expect it’ll attract people that actually understand the value of security. People playing with altcoins are concerned with token appreciation, not self-sovereignty so I suspect people like that won’t be too interested in Taproot,” he said.
However, some developers believe the update might not have a major impact on privacy in the short term. “I would say, until it gets widely used for protocols on top of Bitcoin, it may even impact negatively by making Taproot transactions stand out from the crowd. This is temporary,” said Nicolas Dorier, a Bitcoin developer and founder at BTCPay Server.