the bitcoin network is turning on taproot, one of its most significant updates since 2017, when segregated witness, also known as “segwit”, was first integrated to address bitcoin’s scaling problem.
According to nicehash’s countdown timer, the switch to primary root is scheduled for early Sunday utc. The update seeks to address the 2021 bitcoin network issue, which is programmability.
Reading: Bitcoin taproot upgrade occur
With the Cambrian explosion-like growth of decentralized finance (defi) over the past year, where its total locked value soared to nearly $100 billion, bitcoin effectively sat on the sidelines. Sure, bitcoin can be used as collateral via an ethereum wrapper, but bitcoin’s lack of programmability meant its reliance on these projects to access defi markets.
tapscript, taproot’s programming language, will attempt to resolve this. while not as powerful as the programming languages available on the ethereum virtual machine, it is far ahead of the primitive programming language currently available for the bitcoin network.
a central landmark of bitcoin
The governance of bitcoin’s core, which, to avoid confusion, blockworks canonically refers to simply as “bitcoin”, is a slow and deliberative process. in fact, the taproot update marks a visible change in the history of bitcoin: its version number. Despite the original release of v0.1 dating back to January 8, 2009, the intervening 12 years have seen the version number increase to just 0.21.1. At that rate, bitcoin wouldn’t reach version 1.0 until the late 2060s!
Instead, the project’s core contributors reached a consensus in late 2020 to call the version that activates on Sunday v22.0. the logic of the original proponent was simple. “Honestly I’m tired of all the people asking for ‘1.0’ maybe this will shut them up. skip the whole 1.0 thing and go straight to version 22.0!” wrote on October 22, 2020.
after more than a month of discussion, at a time when bitcoin was trading for around $18,500, developer matt whitlock chimed in with a comment that seems prescient in hindsight:
“I’m surprised no one mentioned the obvious implication here: bitcoin core is now officially out of beta! 🚀… advance the version number to something greater than 1.0 sends the signal that the software is now ready for prime time.”
a small step, but a step that reflects the maturity of a network that now secures $1.2 trillion in btc assets.
learning from the past
since 2017, the analytics toolkits available to track the movement and flow of that btc on the bitcoin network have also increased dramatically in availability and granularity. Nansen, which closed a $12 million round this summer, offers its users the ability to search for actionable trading opportunities by monitoring the flow of funds from whale or institutional wallets.
taroot aims to solve this problem through something called the schnorr signature algorithm. schnorr signatures allow all the digital signatures in a transaction to be combined into one, so a lightning transaction would not look much different from a normal one. this increases privacy and allows for tighter integration of lightning into the bitcoin network, reducing transaction costs due to transaction pooling.
Unlike the introduction of segwit, which sparked considerable debate among the bitcoin community and led to the creation of bitcoin cash, taproot doesn’t appear to have much, if any, opposition. according to a mining pool tracker, taproot-activation, almost all mining pools approved the update.
Similarly, the price of bitcoin hasn’t moved much as the trigger date neared. It was trading at $64,200 with 8 hours before the update, according to Coingecko, an increase of around 5% in the last 14 days. on the contrary, during the segwit update, the price of bitcoin rose early and almost doubled afterwards.
macauley peterson contributed to this report.
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