What Is Taproot and How Will the Upgrade Impact Bitcoin?

The nature of Bitcoin’s development ensures that upgrades come slowly. Any change to the underlying mechanics of the original blockchain requires consensus from a vast percentage of Bitcoin miners. Without that consensus, alterations cannot become permanent. While this creates a degree of stability, it can also have repercussions. Slow development allows smaller, more agile digital assets to thrive by making up for Bitcoin’s perceived weaknesses. Yet, Bitcoin remains the progenitor and public face of the blockchain industry. As such, the cryptocurrency sector eagerly awaits the upcoming Taproot upgrade in November 2021 — Bitcoin’s first major change since 2017.

The last major upgrade introduced the concept of Segregated Witness, or SegWit, to the Bitcoin core protocol. This removed associated signature data, thus freeing up block space for additional transactions. Despite the relatively innocuous nature of the SegWit upgrade, a schism emerged in the community — leading to the forking of Bitcoin Cash and ultimately the later hash wars of 2018. Bitcoin and blockchain technology emerged unscathed from the schism, with Bitcoin Cash’s variants subsiding over time.

In contrast, the proposed Taproot upgrade has proven far less contentious. The Bitcoin community established a drop-dead date of August 11, after which Taproot would be forced back into development. Over 90% of Bitcoin miners signaled their support in early June 2021 during this “Speedy Trial” phase, thereby “locking in” the Taproot activation — far ahead of the proposed deadline.