Real-world use cases are one of the primary adoption drivers for any crypto ecosystem, including the Bitcoin (BTC) network. The Bitcoin protocol will undergo a soft fork known as the Taproot upgrade over the next seven days, with the goal of improving the network’s privacy, efficiency, and smart contracts capability.
Taproot is Bitcoin’s first major upgrade since August 2017, when Segregated Witness (SegWit) was introduced, resulting in the launch of Lightning Network. While the previous fork focused on improving transaction malleability and network scalability, the Taproot upgrade aims to improve transaction efficiency, privacy, and support smart contracts initiatives.
The Taproot upgrade was scheduled for deployment after Bitcoin miners reached a 90 percent consensus (mining nodes). Bitcoin developer Hampus Sjöberg tweeted the following announcement on the same day in June 2021:
— Hampus Sjöberg ⚡ (@hampus_s) June 12, 2021
Merkelized Abstract Syntax Tree (MAST) will be introduced in the Taproot soft fork, introducing a condition that allows the sender and receiver to sign off on a settlement transaction together.
Taproot will also implement Schnorr Signature, an algorithm that will allow users to aggregate multiple signatures into a single signature for a single transaction, reducing the inherent visible difference between regular and multisig transactions.
Schnorr’s signature scheme can also be used to modify the user’s private and public keys in a verifiable manner, confirming the legitimacy of each transaction. According to Gregory Maxwell’s original Taproot proposal from January 2018:
“I believe that by making fixed-party smart contracts appear as simple as possible payments, this construction will provide the greatest amount of anonymity for fixed-party smart contracts.” It accomplishes this without incurring any overhead in the typical case, employing any dubious or impractical techniques, necessitating additional rounds of interaction between contract participants, or necessitating the long-term storage of other data.”
At the time of writing, Taproot.Watch, a website created by Sjöberg, shows that the Taproot upgrade will be activated on November 14th after minting 1020 blocks successfully.
After settling $31 billion in on-chain transactions last month, the Bitcoin network’s daily settlement value reached an all-time high.
The network’s daily settlement volume has increased 40 times since the beginning of 2020, thanks to Bitcoin’s mainstream adoption in El Salvador and other jurisdictions.
There was $31 billion of value settled on the bitcoin network in a single day last week.
This is an all-time high for a single day of settlement value.
— Pomp 🌪 (@APompliano) October 10, 2021
“At the moment, [the Bitcoin network] is doing $190,000 per second.” “Compare this to Visa’s $130k per second for US customers and Mastercard’s $55k per second,” says On-chain analyst Willy Woo.