Bitcoin’s Taproot Update is Live!

• On Sunday, November 14th, the highly anticipated Bitcoin upgrade called “Taproot” went live. The update brings new features and possibilities for developers to improve privacy, scalability, and security on the Bitcoin network.

• The upgrade was pre-approved back in June with an overwhelming consensus of miners supporting the network update.

• Taproot is made up of three Bitcoin Improvement Proposals (BIPs) originally proposed in 2018 and finalized in October 2020. One of the main changes is the switch to the “Schnorr” digital signature system from the ECDSA cryptographic scheme to sign transactions before sending BTC to other addresses. Every transaction using Taproot will now use the Schnorr scheme, which adds new capabilities in terms of privacy, security, and scale of Bitcoin transactions.

• In addition to speed and privacy improvements, Schnorr signatures will enable the creation of smart contracts which are encoded contracts with self-executing conditions.

• So far only a little more than half of known Bitcoin nodes are running the new protocol upgrade. These nodes not running the new update are prevented from mining on the network and will miss out on earning new block rewards until updating to the Bitcoin Core version 21.1. Developers have done much to ensure that miners have had more than enough time to upgrade to the new software, including multiple proposal votes and a 5 month delay from the June census vote to the November activation.