Thread by @1337_pete

1/13. #Bitcoin's Taproot upgrade is < 1 week out (block 709,632 - Nov. 14), meaning the network will undergo a historical upgrade that will enhance Bitcoin's smart contract flexibility, transaction efficiency, privacy, and security.

So, what's Taproot? A quick thread 👇

2/13. #Taproot is the first #Bitcoin soft fork since SegWit paved the way for the Lightning Network in 2017. The soft fork packages 3 BIPs that synergistically empower users and roll out the red carpet for vast innovation on Bitcoin:

✅Schnorr Signatures
✅ Taproot
✅ Tapscript

3/13. BIP340 (Schnorr Signatures) introduces a more secure, light, and flexible cryptographic signature that enables "key aggregation," a technique that ensures single-sig transactions, multi-sig transactions, and complex smart contracts are indistinguishable on the blockchain.

4/13. Schnorr's key aggregation allows the parties of a multi-sig transaction to collaborate to combine their public keys & produce a single signature valid for the sum of their public keys.

This saves block space, improves privacy, and enables faster transaction verification.

5/13. BIP341 (taproot) specifies the rules for the new Pay-to-Taproot (P2TR) output type, which upgrades #SegWit v0 to v1 to accept Schnorr signatures.

It aims to improve the privacy, efficiency, and flexibility of Bitcoin's scripting capabilities without reducing security.

6/13. Bip-taproot leverages Schnorr to include more complex transaction types to appear the same as single-sig transactions on the blockchain.

This includes opening/closing Lightning Network channels, atomic swaps, and other complex smart contract protocols.

7/13. More importantly, bip-taproot implements Merklized Abstract Syntax Trees (MAST), a privacy solution that uses Merkle trees to enable only the executed conditions of a transaction to be committed to the blockchain rather than the full details of all other possible outcomes.

8/13. Merkle trees are used in cryptography to prove data exists in a set without revealing the entire set. By exposing only the details of the executed transaction and thus recording less data on the blockchain, Taproot offers greater privacy and scalability to #Bitcoin users.

9/13. BIP342 (Tapscript) updates the Script coding language used to write $BTC transaction parameters in order to accommodate Schnorr and Taproot technology for those who opt-in to the upgrade.

Tapscript also makes it easier to implement future opcode updates to Bitcoin. 💪

10/13. Taproot is argued to lay the technical foundation needed for #DeFi on #Bitcoin.

Following activation, Bitcoin can host massive smart contracts with tens of thousands of signatories while obscuring all participants and retaining the size of a single-sig transaction.

11/13. Some contend that Taproot, combined with Lightning Network, will advance $BTC's utility from a "Store of Value" to also a "Medium of Exchange," further validating bitcoin as a true peer-to-peer digital cash.

12/13. As the first major update to the Bitcoin protocol since the infamous block size wars that led to the creation of #BCH 4 years prior, #Taproot will likely establish the operational foundation for how soft forks are implemented in the years to come.

13/13. In sum, the Taproot soft fork upgrade in less than a week sets the stage for a new epoch for #Bitcoin.

If you want to learn even more about the Taproot upgrade, download Kraken Intelligence's report "Taproot Primer – An Upgrade for the Ages" 👇

kraken.docsend.com/view/9e9y7may8…