Digital assets firm Kraken notes that one of Bitcoin’s (BTC) biggest and most significant upgrades of all time is “just around the corner.”
However, Kraken also mentions that very few people really understand its “potential impact.” Kraken Intelligence’s most recent report, titled “Taproot Primer: An Upgrade For The Ages,” has looked into the three Bitcoin Improvement Proposals (BIPs), which are included in the Taproot upgrade. The report goes over the transaction efficiency and user-privacy benefits that this system-wide update will bring to the Bitcoin (BTC) protocol.
After being proposed back in 2018, consensus for Taproot’s implementation has been reached (in June of this year) as well as its three proposals (Schnorr, Taproot, and Tapscript) – which are expected to go live in November of this year.
Taproot’s Building Blocks:
- BIP340 (Schnorr Signatures): Schnorr provides a “more secure, lightweight, and flexible type of cryptographic signature, while introducing a technique called ‘key aggregation.'” This implementation “ensures that single-signature, multi-signature, and even smart contracts transactions are indistinguishable on the blockchain, improving user privacy and reducing data load.”
- BIP341 (Taproot): Taproot “brings Merklized Alternative Script Trees (MAST) to the Bitcoin network, ensuring that only the executed condition of a bitcoin transaction, rather than all possible outcomes, are committed to the blockchain.”
- BIP342 (Tapscript): Tapscript “delivers an improved version of the programming language (Script) used to conduct bitcoin transactions, which will allow the protocol to utilize the benefits of Schnorr and Taproot.” Tapscript also “enables developers to implement future upgrades more seamlessly.”
Taproot’s improved user privacy and transaction efficiency should be able to offer several important benefits. According to the report from Kraken, the update essentially means that “details about a user’s unexecuted spending conditions are not revealed, resulting in improved privacy when transacting on the network and a lighter data load on the blockchain.”
The Kraken team added:
“Additionally, Taproot is expected to enable large multi-signature vaults, allowing users to lock up bitcoin for usage in a sidechain while costing the same as a single-signature transaction. These improvements are expected to be especially significant for the Lightning Network in supporting massive channels that were previously infeasible.”
They also noted that the upcoming Taproot upgrade is “significant not just in its technical changes, but in its implementation process.” Some think that Taproot will “set the operational foundation for how Bitcoin protocol upgrades are implemented in the years to come,” the report noted.
As mentioned in the update from Kraken Intelligence, Taproot has “the potential to further empower users and pave the way for a new era for Bitcoin following activation in November 2021.”
For more details on this announcement and the full report, check here.