The soft fork that permanently activated the Taproot update on the Bitcoin blockchain took place on the night (UTC) of 13-14 November 2021.
Bitcoin Taproot, successful soft fork
Block 709,632 was successfully mined at 5:15 AM UTC on 14 November, and it is effectively the first block mined with the new updated protocol.
The Bitcoin protocol is very difficult to update, because its control is very decentralized, so much so that for Taproot to be approved it was necessary for 90% of the blocks to indicate their acceptance of the update.
In fact, the previous update, the one that introduced SegWit, was more than four years ago, making it very clear how infrequently the Bitcoin protocol is updated.
The Taproot update proposal was launched as late as May two years ago, and it was not until May of this year that it received final approval and was finally applied to the Bitcoin protocol in November.
Bitcoin: What changes with Taproot?
Yesterday’s update was triggered by a soft-fork, a backwards-compatible protocol update. This means that those who wish to continue using the old protocol can do so freely, although they run the real risk of not being able to understand some transactions using the new parts of the protocol.
The update has actually introduced two significant new features, because in addition to Taproot, Schnorr signatures have also been introduced.
In particular, Taproot allows for the expansion of the functionality and flexibility of smart contracts on the Bitcoin blockchain (called scripts in this case). But probably the most interesting thing in the short term is that it allows improving the privacy of BTC users, making complex smart contracts indistinguishable from common transactions.
In order to work properly, Taproot also needs Schnorr signatures, which were also introduced with yesterday’s update.
Schnorr signatures optimize the weight in bits occupied by transaction signatures within blocks. They also make it possible to compress the signatures of all participants in a transaction into a single signature, which significantly increases the level of privacy.
The biggest change in the short term is therefore a significant increase in the level of privacy of the Bitcoin blockchain, which now allows the signatures of the senders of a transaction to be masked using the smart contracts made possible by Taproot and Schnorr signatures.
The development of the Bitcoin network
But this update will also most likely bring changes in the long run, as it will allow developers to be able to create and use more complex smart contracts on the Bitcoin blockchain as well.
Together with the Lightning Network, this opens up a new phase of development on the Bitcoin protocol which opens the door to possibly many innovations in the coming months or years.
The true potential of this update may not reveal itself in the short term, but only in the medium to long term, i.e. when developers know how to make the most of the new opportunities made possible by Taproot and Schnorr signatures.