What to expect from the Taproot upgrade for Bitcoin?
Six major mining pools (Slush, Antpool, Poolin, Luxor, F2Pool, BTC.com) representing over 50% of the Bitcoin Hashing power have already expressed their support to the Taproot implementation.
But what does it mean for the Bitcoin network?
Smart contracts, scalability and privacy
Taproot upgrade, proposed first in 2018, should increase smart contracts deployment’s flexibility by using a Merklized Abstract Syntax Trees (MASTs), a smart contract architecture technology proposed by developers since 2013.
On top of it, Taproot’s privacy relies on a new signature algorithm “Shnorr”, which, combined with the optimized script programming language “Tapscript”, should improve the pseudonymous specificity of the chain and therefore raise up its privacy.
Additionally, the “Shnorr” signatures reduce the size of Bitcoin’s transactions, making the chain more scalable (process more transactions per second).
Multi-signatures should also become easier to implement with the new BIP-Taproot protocol.
Binance pool is relatively new to the game but has been growing relatively quickly and represents today about 12% of the Hash Power. The Exchange-backed pool has already expressed some reluctance to support the upgrade, but without making any official statement.
It is possible that an increased privacy could undermine Binance’s efforts regarding KYC/AML compliance, forensics and transaction reconciliations when it comes to the Bitcoin’s Network.
If no official date has yet been released, it is expected to take place somewhere in the middle of 2021. To be implemented, the upgrade requires at least 51% of the Hashing power supporting it, which seems to already be the case, considering the support of the 6 major pools described at the beginning of this article.
The Taproot upgrade is the most anticipated soft-fork since Segwit in 2016.