What is Bitcoin Taproot
Today we want to explain to you what the Taproot soft fork of Bitcoin is. This update is highly anticipated, bringing improved privacy, scalability, and security. This soft fork will happen at the block height of 709,632, approximately on the 14th of December 2021. There will not be another token being created during the fork like a few previous hard forks of Bitcoin.
At the time this article is written the countdown looks like this. Live countdown can be accessed at the link below this image.
Taproot countdown can be accessed here.
What is Taproot
This fork is a step towards improving Bitcoin’s privacy. Bitcoin is infamous for having a public blockchain leading to all transactions of every wallet in Bitcoins existence to be public – sometimes it was possible to figure out who was sending money to who. People could use Bitcoin laundering services like mixers; however, they do not stop Bitcoin from having a public blockchain. Sometimes the mixers could also lead to users getting scammed by fake mixers.
Bitcoin is currently public in all of its aspects. You can see all the moving parts of the blockchain and transactions. Taproot aims to hide these moving parts to increase the privacy of the transactions. This change is an essential change to Bitcoin because one of the biggest criticisms of Bitcoin is that all of its transactions are public.
It currently seems that Taproot will make a smart contract and a transaction indistinguishable. This change sounds fantastic; however, it looks like you will still be able to see the address of the sender and the receiver. Before Taproot can be implemented, there needed to be another change – Schnorr’s signatures also have to be added to the Bitcoin core.
More info about Taproot can be accessed here.
What are Schnorr’s Signatures?
Schorr’s signatures are a signature scheme that is essential for Taproot to be implemented to Bitcoin core. The main reason for their usage is their ability to take multiple keys from a Bitcoin transaction and produce a single unique signature from them. This is why the developers of Bitcoin chose Schnorr’s signatures for Taproot.
More info on Schnorr’s Singatures can be accessed here.
Why is this good?
Three things are brought to the table, thanks to Taproot. The first one is that more of the transaction will be masked, leading to increased privacy. You will still see the sender and the receiver, but this is a step in the right direction. Secondly, the implementation of Taproot will decrease fees for transferring Bitcoin, which is relatively high when compared to newer cryptos. Lastly, Taproot will also allow for more transactions per block hence increasing the transactions per second.
There are multiple downsides to using Bitcoin today for transactions versus alternatives. When buying something with Bitcoin, you often will have to pay a hefty fee due to the primitive blockchain vs. newer cryptos. Another downside is that you will often have to wait long, sometimes hours before your transaction makes it to the desired address. Lastly, this does not concern everyone that uses Bitcoin, but Bitcoin has a public ledger. You can see all transactions since the inception of Bitcoin and figure out the origin of all tokens. You can track down all Bitcoin tokens to the wallet they originated from.
Currently, implementing privacy requires more data to be transferred with every transaction. Higher data requires larger blocks, so more fees theoretically, which is not what we want. However, it is nice to see that Bitcoin is trying to solve one of its Achille’s heels.
Bitcoin is often seen as the crypto that allows you to make transactions without the knowledge of the banks or the government, but that can’t be further from the truth. The same way your bank can know everything you spend your money on, including cash through serial numbers, they can do the same for crypto. Whenever you buy crypto, most platforms require you to provide your identity. Your crypto then is tied to your identity, and when you make a transaction, your crypto can be traced back to you.
Overall, it’s a step in the right direction. Still, hopefully, we will have anonymous transactions with Bitcoin soon, just like XMR (Monero) and ZEC (Zcash), which are privacy-focused cryptocurrency projects.
If you wish to know how to get your hands on some crypto without giving up your identity, we have a guide that shows you the various methods of acquiring crypto.