Taproot Meaning
What is Bitcoin’s Taproot?
Taproot is an update to the Bitcoin network which was done to increase its scalability. The update is often billed as the most consequential update any cryptocurrency project has experienced since the Segregated Witnesses (SegWit) upgrade of 2017. The Taproot proposal was announced in 2018 by Greg Maxwell, a developer on Bitcoin. The upgrade was the culmination of the adoption of three Bitcoin Improvement Proposals (BIPs). The goal of Taproot was to improve privacy, scaling, and security on the Bitcoin blockchain.
The upgrade was also designed to encourage developers to build and deploy smart contracts on the Bitcoin blockchain, allowing users to access DeFi services without intermediaries.
Before any proposal can be implemented, the majority of Bitcoin nodes have to adopt it. Over 90% of the nodes adopted the Taproot proposal in June 2021, and it went live on November 14, 2021.
How Does the Upgrade Affect Bitcoin?
The Taproot upgrade is made up of 3 different and complementary proposals. The BIP340 (BIP – Schnorr) proposal adds a signature model to the Bitcoin network known as Schnorr Signatures. This means that you can sign once for many transactions instead of doing so for each. BIP340 achieves this by aggregating multiple keys inside one complex transaction to produce a single unique key, thus, allowing a single signature for authorization. This increases the TPS rate per block.
The BIP341 (BIP – Taproot) improves the scalability of the Bitcoin network by reducing the number of verifications needed to complete a transaction. Taproot targets complex Bitcoin transactions that may include details like private keys, public keys, and other inputs. These sorts of transactions clog up the blockchain with large amounts of data, even when they are unconfirmed. BIP341 resolves this by publishing only the details of a completed transaction. More complex transactions like smart contracts are sometimes displayed as simple peer-to-peer transactions on the blockchain to add privacy to these transactions.
BIP342 (BIP – Tapscript) is an improvement on the Script coding language used on Bitcoin and makes it easy to integrate new codes into the blockchain in the future. The Tapscript upgrade made it possible to deploy the other two BIPs on Bitcoin.
What’s the Difference Between Taproot and SegWit?
The Segregated Witnesses (SegWit) upgrade allows up to 3MB of data to be stored on the Bitcoin blockchain outside the 1MB block limit. The Taproot upgrade removes the data storage limit entirely and allows as much data that a block can carry to be stored.