Crypto Currency News

What does the Bitcoin Taproot update entail and what will be its effects ?

The long-awaited upgrade will take place this weekend. We tell you what it is about and what benefits it will bring

The long-awaited Bitcoin Taproot update is almost here. It is scheduled to take place this weekend, sometime on Saturday, November 14.

What does this “upgrade” of the network mean? What improvements does it bring?

Taproot is primarily an update that will improve Bitcoin’s ability for scripting, bringing it in line with blockchains like Ethereum that already have programmable smart contracts.

Experts say that Taproot is one of the most important updates to the network – the largest since SegWit, which was activated in 2017. And Taproot is expected to not only expand the capabilities of Bitcoin smart contracts and scripts but also improve the capabilities of Bitcoin. Privacy measures

To that end, Taproot will introduce MAST (Merkelized Abstract Syntax Tree), which will make it difficult to track and analyze Bitcoin transactions, making complex transactions – such as multi-signature transactions and Lightning Network transactions – indistinguishable from basic transactions.

Basically, the Taproot update will transform Bitcoin in two fundamental ways.

  • will allow simple smart contracts to run on Bitcoin, and
  • Will allow Bitcoin to compete as a privacy currency.
See also  Venezuelan crypto miners were disconnected from their electricity sources

But let’s go a little more in detail.

To understand how this update works, you first need to understand the motivations of the developers who created Taproot. The current version of Bitcoin, prior to Taproot, has a couple of fundamental problems:

The first is scalability (due to the small size of Bitcoin’s blocks),

The second is privacy (because complex transactions are easily traceable).

Therefore, the crypto code within the Taproot update seeks to decrease the transfer of data on the chain and strengthen the privacy of Bitcoin through data compression techniques. The Schnorr signatures and trees Scripts Alternative Merklizados (Merkelized Abstract Syntax Tree or MAST scripts) are the solutions that achieve this goal.

Currently, Bitcoin uses an encryption method known as ECDSA to “sign”, prove ownership, and execute transactions. ECDSA stands for Elliptic Curve Digital Signature Algorithm, a system used to create a digital signature that allows third-party verification without compromising security.

After Taproot, Bitcoin users will be able to use Schnorr signatures in addition to ECDSA signatures.

Schnorr allows that a set of transaction signatures with the same entry can be replaced by a single signature and thus reduce the storage space occupied within a block, which allows transactions to be confirmed much faster, improving the network performance.

See also  The number of cryptocurrency users doubled in the first half of 2021

Additionally, Schnorr signatures allow the implementation of another crypto function known as MAST scripts. MAST scripts improve scripting compression on the Bitcoin blockchain. To understand this, you have to know that when the code is executed on a blockchain, it goes through a process known as “verification”, by which all of that code is sent to all nodes on the network. MAST scripts allow developers to compress their code into a single hash, called the “MAST root”.

Through their hashing process, MAST scripts only transfer to the Bitcoin blockchain the minimum amount of information necessary for the code to execute, that is, they compress the code into conditional routes, and only transfer the condition of the code that has been met, rather than the entire content.

In summary, MAST is a type of crypto compression that reduces executable code to a single root value to save space when this data is transferred over the network. In other words, they save space and promote privacy.

See also  Bitcoin price fails to rally and falls below $ 42,000

What will happen after Taproot? What will its impact be?

Since the update will be in the form of a soft fork -soft fork- compatible with previous versions, that is, the update will simply add functionalities to the Bitcoin protocol, it is unlikely that Taproot will have immediate drastic effects.

However, the Lightning network and the Bitcoin sidechains will be the most affected.

Taproot will make the Lightning network more private and lightweight. Private, because coin transfers to and from the Lightning network will be unidentifiable. And lighter due to signatures

The Taproot update will first improve the overall functionality of Bitcoin as a store of value and medium of exchange, and second, it will improve Bitcoin’s programmability and support for complex transactions.

As a network, Bitcoin will continue to be limited in terms of programmability. The Taproot update applies specific improvements to the Bitcoin protocol that do not cause immediate or drastic changes.

Most importantly, Taproot enhancements lay the foundation for future innovations.

Tags
Back to top button
Close
Close