A bitcoin soft fork, which is a change to the way transactions are processed on the blockchain, has been expected for some time now. This week’s planned implementation could see two competing versions of bitcoin co-existing in parallel. The question remains what will happen if one version becomes more popular than the other?
The “taproot bitcoin” is a soft fork that will take place in the next few days. The upgrade will close in on the Bitcoin blockchain and allow miners to create blocks with more than 1 MB of data.
Real-world use cases are one of the key acceptance drivers for any crypto ecosystem, and the Bitcoin (BTC) network is no exception. The Bitcoin protocol will undergo a soft fork called Taproot upgrade in the next seven days, with the goal of improving the network’s privacy, efficiency, and smart contract capacity.
Taproot is Bitcoin’s first significant update since August 2017, when Segregated Witness (SegWit) was introduced and Lightning Network was launched. The Taproot update attempts to increase transaction efficiency, privacy, and enable smart contracts projects, as opposed to the previous split, which mainly attempted to solve transaction malleability and improve Bitcoin’s network scalability.
After obtaining 90 percent unanimity among Bitcoin miners, the Taproot update was ready to go out (mining nodes). Bitcoin creator Hampus Sjöberg tweeted the following news on the same day in June 2021:
WE ARE NOW LOCKED IN! #Taproot #Bitcoin
@TheGuySwann’s video! pic.twitter.com/YFLMTenWW0 https://t.co/rCUp5VNCBX pic.twitter.com/YFLMTenWW0
Hampus Sjöberg (@hampus s) (@hampus s) (@hampus s) (@hampus s) (@hampus s) 12th of June, 2021
Merkelized Abstract Syntax Tree (MAST) will be introduced in the Taproot soft fork, which offers a condition that enables the sender and recipient to sign off on a settlement transaction simultaneously.
Taproot will also include Schnorr Signature, a method that allows users to combine several signatures into a single transaction, eliminating the obvious difference between ordinary and multisig transactions.
Schnorr’s signature system may also be used to alter a user’s private and public keys in a verifiable way, allowing the authenticity of each transaction to be confirmed. Gregory Maxwell’s initial Taproot proposal from January 2018 reads as follows:
“I think that by having fixed party smart contracts seem as the simplest possible payments, this structure will enable the broadest possible anonymity set for them.” It does so without any overhead in the typical scenario, without relying on any sketchy or impracticable procedures, needing additional rounds of contract participant interaction, or necessitating the long-term storage of other data.”
According to Taproot.Watch, a website created by Sjöberg, the Taproot update will be triggered on November 14th, after the successful minting of 1020 blocks.
The Bitcoin network has hit a new milestone in terms of daily settlement volume.
After resolving $31 billion in on-chain transactions only last month, the Bitcoin network’s daily settlement value reached an all-time high.
The network’s daily settlement volume has increased by 40 times since the beginning of 2020, owing to Bitcoin’s mainstream acceptance in El Salvador and other countries.
Last week, the bitcoin network resolved $31 billion in value in a single day.
This is an all-time high in terms of settlement value in a single day.
The worldwide, decentralized payment system is becoming more prevalent. pic.twitter.com/a6Q2FbPY3C (h/t @kerooke)
— Pompliano (@APompliano) 10/10/2021
“At the moment, the Bitcoin network is doing $190,000 per second.” “Compare this to Visa’s $130k per second for US consumers and Mastercard’s $55k per second,” says On-chain expert Willy Woo.
The “bitcoin taproot upgrade” is a soft fork that will be implemented on August 15th. The update is expected to close in on September 1st, which means the hard fork will take place before then.
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