It won’t be long before the much-anticipated Taproot appears on the Bitcoin network. Updates have been in the software for some time, but they are activated from block 709.632 for nodes running the latest version of the software. Four years after launching Segregated Witness, enabling the Lightning Network in its current form, among other things, we are now facing Bitcoin’s next major update.
A total of four years between Taproot and Segregated Witness shows how keen people are about Bitcoin software. Protocol updates are rare and you have to jump through a lot of hoops to finally get to know them. Certainty and patience are two key values that describe bitcoin well. Nothing can go wrong, because there is so much at stake. It’s time to take a closer look at Taproot to see what additional possibilities this will offer us.
A new way to sign deals
The first major additional feature that root It requires so-called Schnorr signatures. With this new method of signing, transactions are getting smaller. In the current format for ECDSA signatures, it takes about 72 bytes to sign a transaction. On the other hand, signatures with Schnorr cost only 64 bytes per signature, which is roughly a 12 percent improvement over the current method.
This has the effect that thanks to Schnorr’s signatures, we have to pay lower transaction costs and the blockchain is comfortable. After all, we need to save less data on the network to make a transaction. This is a nice boost to Bitcoin’s efficiency, but Schnorr’s real value lies in the validation of the data.
In the current format, when a Bitcoin node receives a block, it must validate each individual transaction and signature and this takes a relatively lot of effort from the computer. Signatures set using Schnorr can be combined and validated with full loads simultaneously. The more Schnorr signatures we use in transactions, the less we rely on the computing power of the network. Which of course benefits Bitcoin’s scalability.
In addition, the Schnur app is a big plus for people who value their privacy very much. For example, thanks to the way Schnorr works, it is impossible to distinguish between a normal Bitcoin transaction and the opening of a channel in the Lightning Network. Something that is not currently possible with ECDSA signature.
Taproot is a win-win for Bitcoin scalability and usability
We’re making progress on several fronts with the long-awaited introduction of Taproot. Bitcoin transactions become more efficient and we can send more complex transactions to the network with more privacy. What you may not know is that in theory a transaction has a limit of 100KB. Miners can in principle add a larger transaction to their blocks, but nodes in the network are created in such a way that they are not allowed to pass transactions larger than 100KB to miners.
Taproot makes bitcoin transactions more efficient in a number of ways, leaving more room for additional transaction complexity. In other words, the 100KB limit can be used more efficiently, enabling things that were unimaginable before Taproot was introduced.
It is not yet clear what this will bring us, but if we have learned anything in recent years, we should not underestimate the creativity of Bitcoin. There is a good chance that Taproot, for example, is the starting point for additional capabilities with smart contracts on Bitcoin. There is a lot to get excited about. We’re curious as to what Taproot will bring us in the coming years.
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