Bitcoin’s first major upgrade in 4 years, what major changes does it bring?

On June 13, Bitcoin’s network-wide support for the Taproot upgrade exceeded 90% of the pool’s computing power, meeting the minimum requirements to lock in the upgrade, which means the Taproot upgrade will be officially activated this November.

On June 13, Bitcoin’s network-wide support for Taproot upgrades exceeded 90% of the pool’s computing power, meeting the minimum requirements for a locked-in upgrade, which means the Taproot upgrade will be officially activated in November of this year.

Regarded as the “most ambitious upgrade” in years, Taproot represents a significant upgrade in the eyes of the industry, especially Bitcoin enthusiasts, and is “by far the most significant proposed upgrade to the Bitcoin protocol”.

But compared to the Ether EIP 1559 proposal, which has caused a lot of debate in the industry, the Taproot upgrade has not generated a lot of noise in the industry, and many of you have never even heard of it.

01, What is Taproot Upgrade?

Bitcoin's first major upgrade in 4 years, what major changes does it bring?

Taproot Activation

Bitcoin is updated every so often (soft forks of the network) to introduce new features and information to Bitcoin, mainly in the form of Bitcoin Improvement Proposals (BIPs).

This latest Taproot update is a compilation “upgrade package” of three BIPs, i.e. the Taproot update contains the Schnorr signature (BIP 340), Taproot (BIP 341) and Tapscript (BIP 342 ) in three parts.

  1. BIP 340 – Schnorr Signature

The Schnorr signature scheme has long been on the wish list of many Bitcoin developers, as a cryptographic digital signature scheme developed by German mathematician and cryptographer Claus Schnorr, known primarily for its simplicity and efficiency in generating short signatures.

One of the main advantages of Schnorr signatures is their ability to capture multiple keys and generate unique signatures in complex bitcoin transactions. This means that signatures involving multiple parties can be “aggregated” into a single Schnorr signature, hence the term aggregated signature.

So in a nutshell, Schnorr signatures are primarily a space saver and cost reducer, and have been touted as the biggest technology update since Bitcoin Segwit.

  1. BIP 341 – Taproot

Taproot is a solution based on the Schnorr signature that can contain complex transaction conditions and money usage details, and then make all of that available to the outside world as a new money usage condition (a new lock). This new usage condition and the unlocking method for that usage condition (a new key) is supported by Schnorr’s linear feature .

This provides the user with the ability to choose between complex arbitrary scripts and simple payments to public keys when consuming (not collecting), in addition to key aggregation that makes all Taproot outputs look similar.

So since multi-signature outputs, single-signature outputs and other complex smart contracts all look the same on the blockchain, many blockchain analytics will be unavailable, thus preserving privacy for all Taproot users.

  1. BIP 342 – Tapscript

BIP 342 adds and updates several opcodes that are part of the machine language instructions that specify the operation to be performed. These new scripts help verify Taproot overhead and Schnorr signatures, collectively known as Tapscript, maximizing the flexibility of P2TR spending and also facilitating future upgrades.

It will improve scripting functionality and privacy and can help make smart contracts more efficient and private by displaying only relevant parts of the contract at the time of spending.

In short, the heart of the Tarpoot upgrade lies in the Schnorr signature, and Taproot’s foundation in the Schnorr signature algorithm could bring a whole new combination and possibility to Bitcoin in terms of performance, privacy, and even smart contracts.

02, Tarpoot Upgrade
One of the most significant proposed upgrades to the Bitcoin protocol

Bitcoin's first major upgrade in 4 years, what major changes does it bring?

As we all know, Bitcoin is a digital signature that unlocks the unspent balance in UTXO to complete the exchange, which can be simply broken down for an exchange – for example, if A transfers one Bitcoin to B, the actual process can be divided into “unlocking” and “adding”. “unlock” and “lock” steps.

Unlocking: A provides its own private key, and completes the unlocking, thus proving that the bitcoin belongs to it and can be called.

Unlocking: A uses B’s public key to lock the bitcoin and then transfers it to B, so that only B can use its own private key to unlock it.

That is, Bitcoin needs to be locked using the public key and unlocked using the private key, thus enabling the transfer of cryptocurrencies for exchange. The public and private keys are generated by digital signature algorithms, and the Schnorr signature mentioned above is the new signature algorithm.

Its most prominent feature is that it can aggregate multiple public keys or multiple private key signatures into a new public key or a new signature, which can be simply understood as turning multiple locks that need to be unlocked at the same time into one lock, and turning a bunch of keys used for unlocking into one key.

So from this perspective, the Tarpoot “upgrade package”, which is considered “the most important of the proposed upgrades to the Bitcoin protocol”, could change Bitcoin in a number of ways.

Performance – Rollup-like Scaling Effect

First, the performance improvements are the most immediate. This is because Taproot, based on Schnorr’s signature, can contain complex exchange conditions and fund usage details, and then make all of this available to the outside world as a new fund usage condition (a new aggregated signature lock).

This reduces the amount of data transmitted and stored on the blockchain, allowing a single block to contain more transactions, which in turn reduces costs and has the effect of scaling capacity (actually, I think it’s a bit like Rollup on Ether).

Privacy – Enhanced Privacy Options for the Bitcoin Network

Secondly, the privacy perspective will also get the biggest boost. This is because Schnorr signatures, while not making individual bitcoin addresses on the public blockchain more anonymous, will make simple exchanges indistinguishable from those that are more complex and consist of multiple signatures.

It would also allow users to mask complex smart contracts as ordinary bitcoin exchanges, bringing greater privacy to users.

03, Bitcoin’s “Tough Payments” Road

The upcoming Ether London upgrade in July will include not only the eagerly awaited EIP-1559 proposal, but also EIP-3198, EIP-3529, EIP-3541 and EIP-3554 in a total of five proposals.

Unlike the flourishing ecosystem of borderless innovations in ethereum, bitcoin upgrades have always been very quiet, and I believe many of you even feel that bitcoin development may be at a standstill.

Especially since 2020, everyone seems to have gradually acquiesced to the positioning of Bitcoin as “digital gold” and forgotten about the “global currency” behind the industry’s heated debates and even the “BCH fork”. The “global currency” behind the “BCH fork” is a payment attribute, and it seems that upgrades in technology applications are not that important.

Bitcoin's first major upgrade in 4 years, what major changes does it bring?

Lightning Network: Bitcoin Capacity

Like the Lightning Network, which is dedicated to Bitcoin micropayments, the number of locked-in Bitcoins has finally surpassed 1,500 after nearly three and a half years of effort, a 42% increase from the beginning of 2021 and a record high, which seems like a great achievement.

But at the same time, in the past year, the total number of bitcoin anchor coins issued on the ethereum chain has almost started from zero and exceeded 252,000, the bitcoin lightning network several years of hard work to promote, in the end, even “ERC20 bitcoin” zero can not compare.

The Taproot upgrade could be considered a timely rain, enhancing Bitcoin’s usability in terms of payment performance, privacy, including the Lightning Network, and if adopted, Taproot could improve the privacy of the Lightning Network by making the channel look like a regular Bitcoin exchange, perhaps making up for Bitcoin’s status as a “global currency “status, giving it an advantage in competing with “digital gold” positioning.

But whether “digital gold” becomes more popular or “global currency” is the original intent, perhaps Bitcoin is no longer the same species as all other cryptocurrencies, including ethereum.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/bitcoins-first-major-upgrade-in-4-years-what-major-changes-does-it-bring/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Like (0)
Donate Buy me a coffee Buy me a coffee
Previous 2021-06-21 01:54
Next 2021-06-21 02:08

Related articles