A little less than a month ago, the Bitcoin miners around the world signaled enough in the affirmative to start accepting Taproot around November 12th of this year. For those who follow the price of Bitcoin and may be sitting on the sidelines, this upgrade not only is a monster but lays the foundation for further development of the network. In that it is the first upgrade in four years is a positive sign, as the Bitcoin community is not only decentralized, it may be a higher threshold than an Act of Congress to upgrade to the network.
But the secrets behind Taproot, with the ability behind a better network efficiency as well as higher levels of privacy for transactions, may unlock a much higher price that could be an ‘all-time high’ above $100,000. The serendipity at which Taproot arrives and where regulation is at should also add value to the proposition of Bitcoin.
This piece takes a look at some of the tech at a very high level to help explain Taproot in laymen’s terms. Additionally, explanations and further details are expanded upon by two interviews. To start down the tech path, let’s take a look at a quote that first introduced Taproot. “The special case of a top level ‘threshold-signature OR arbitrary-conditions’ can be made indistinguishable from a normal one-party signature, with no overhead at all, with a special delegating CHECKSIG which I call Taproot,” said Gregory Maxwell in his introduction of the concept of Taproot in 2018.
Taproot uses two types of technologies that we will have one of our two experts explain momentarily, but first as it applies to the potential for upside on the price of Bitcoin, I spoke with D++. Using her pseudonym as her name as a privacy advocate, D++ is a revolutionary cypherpunk and Bitcoin maximalist on her Twitter feed, offered her view of the potential price impact of Taproot.
“Taproot makes Bitcoin better…but the price is not built in,” says D++ who views the potential for greater institutional adoption as a result of the upgrade to the network.” celebration of this amazing technology; Bitcoin scripts and spending smart contracts, multisigs and lightning, because they all look the same, give you the added privacy.
Nadav Cohen, Security Engineer at Suredbits, is also a regular on Clubhouse and usually can be found explaining very complicated Bitcoin and Lightning coding and technical aspects, which typically the rest of the audience picks up from either a base layer or additional layer of technical understanding in how Bitcoin works.
With Taproot, a Merkle Abstract Syntax Tree (MAST) hashes all the different conditions of a contract; however, the use of Schnoor signatures permit the transactions executed to be private. To further explain, Schnoor signatures are a different form of digital signature than what has powered the network from the beginning: Elliptic Curve Digital Signature Algorithm (ECDSA).
Taproot is also critical in that the Bitcoin community implemented this change as a soft fork, meaning the changes are backwards compatible. “The Bitcoin network is conservative and we don’t make backward incompatible changes…the argument could be made it isn’t right to deny Satoshi his coins with a backwards incompatible change,” says Nadav Kohen, security engineer at Suredbits.
Kohen is excited that Taproot provides a foundation where, “…the improvements lay the groundwork for future potential upgrades that may improve efficiency, privacy, and fungibility further.” Meanwhile, an individual who goes by the name ‘D++’ on Clubhouse and has been a participant on many Clubhouse chats discussing both Bitcoin and lightning networks, took some time to explain to me her excitement about Taproot.
D++ noted that, “consensus for upgrading Bitcoin is very difficult. In 2017 there were … the ‘Blockchain wars’… infighting. confusion as to how to update Bitcoin going forward.” This time, however, D++ points out there is a concerted effort that, “Everyone wants Taproot to be upgraded in community.”
Taproot is now locked in and will be released around November 12. What to expect? D++ describes the upgrades as, “…cool: Schnoor signatures, Taproot, Merkle Abstract Syntax Trees, means ‘privacy’ on Bitcoin – not private, but still pseudonymous, and is still on a public ledger.” D++ noted Taproot simply obfuscates details so multisig is not apparent with Taproot.