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Cash App To Add Bitcoin Taproot Support By December
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Tag: Taproot
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Long-Awaited Bitcoin Upgrade Taproot Goes Live As BTC Consolidates
Bitcoin has undergone a long-awaited upgrade that seeks to enhance its privacy and scripting capabilities.
Taproot, the first major change to Bitcoin since SegWit (Segregated Witness) in 2017, was first proposed in 2018. The upgrade was locked in back in June and has now been activated at block 709,632.
Taproot enables MAST, which helps make smart contracts more efficient and private by only revealing their relevant parts during spending. It also aims to improve the privacy of the Lightning Network by making channels look like usual Bitcoin transactions.
Previously, market intelligence firm IntoTheBlock had mentioned Taproot as a potential catalyst for a BTC rally.
Ninos Mansor, partner at Arrington XRP Capital, published a report last month on Taproot saying that it will redefine the largest crypto by market cap.
“The upgrade could be a macro turning point for evolvability and innovation, merging the best of post-Segwit conservatism with the energy of new beginnings. It is a meta-upgrade, a chance to redefine what it means to contribute to Bitcoin, whether one is a miner, developer, or full node.”
At time of writing, a little over half of all nodes are signaling support for the upgrade. Segwit, Bitcoin’s last major upgrade, took over two years to gain 50% adoption, according to Woobull.
Bitcoin is trading at $65,370 at time of writing.
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Bitcoin sets up nail-biting weekly close after Taproot goes live
Bitcoin (BTC) traded above a key zone into the weekly close on Nov. 13 after the successful activation of the Taproot soft fork.
What ETF rejection?
Data from Cointelegraph Markets Pro and TradingView showed BTC/USD holding above $64,000 at 10 am UTC Sunday.
The pair had gained in the latter part of Saturday after briefly acting below $63,000 thanks to U.S. regulators rejecting what would have been the first spot-based exchange-traded fund (ETF).
Seemingly unfazed by the move, however, Bitcoin then returned to form, seeing local highs of $65,350 on Bitstamp before consolidating.
Far from lamenting the ETF news, Sunday was all about positive steps for Bitcoin, with market participants celebrating Taproot’s launch.
The biggest upgrade to the Bitcoin protocol since 2017, Taproot provides a host of benefits impacting everything from security to Lightning Network efficiency. It was first proposed seven years ago by developer Greg Maxwell and has now finally become reality.
“The real work will be in building wallets/protocols that build on top of it to make use of its advantages,” Bitcoin core developer Pieter Wuille said as part of comments Sunday.
“I’m very excited to see where that takes us.”
As Cointelegraph reported, soft forks have historically preceded bullish BTC price periods.
Can Bitcoin “save” the weekly close?
Sunday’s weekly close meanwhile sets up a challenge for bulls looking for a clean break above a six-month resistance level.
Related: Price analysis 11/12: BTC, ETH, BNB, ADA, SOL, XRP, DOT, DOGE, SHIB, LUNA
With Bitcoin characteristically putting in weaker price moves on Sundays and recovering on Mondays in recent weeks, the market stayed in the dark as the weekend came to a close.
Can the weekly be saved for #Bitcoin?
— Michaël van de Poppe (@CryptoMichNL) November 14, 2021
“Looking for price to hold prev ath from April and this to be a higher low,” trader Pentoshi added analyzing daily timeframes.
“The range we don’t want to go back into is the one we just came from.”
“Moonvember” still holds an increasingly controversial end-of-month price target of almost $100,000.
Why Taproot Is An Important Addition To Bitcoin
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Taproot Activation Is Upon Us
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Understanding Taproot In A Simple Way
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Bitcoin’s Taproot Upgrade Should Occur On Saturday
Key Takeaways
- Bitcoin’s Taproot update is expected to occur on Saturday.
- The upgrade will improve Bitcoin’s privacy and programmability while making transactions faster and less expensive.
- Hype around Taproot may have helped Bitcoin achieve new all-time highs this week.
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Bitcoin’s long-awaited Taproot update will occur in the coming days, with most sources suggesting Saturday as its activation date.
What Is Taproot?
Taproot is an upgrade that will improve Bitcoin’s capacity for scripting, bringing it in line with competing blockchains like Ethereum that already have programmable smart contracts.
Taproot will also introduce MAST (Merkelized Abstract Syntax Tree), which will make it more difficult to trace and analyze Bitcoin transactions. It does so by making complex transactions—such as multi-signature transactions and Lightning Network transactions—indistinguishable from basic transactions.
The upgrade will also include Schnorr signatures, which will create smaller transaction sizes through data aggregation.
Together, these features mean that developers will be able to create more extensive Bitcoin applications, while end-users will be able to benefit from cheaper, more private transactions.
Taproot is Bitcoin’s most significant upgrade since 2017, when the cryptocurrency introduced a controversial new feature called SegWit. The Taproot upgrade is much less likely to cause division.
Upgrade Will Likely Take Place Saturday
Though Taproot already gained support from miners earlier this week, 800 blocks will need to be mined under those conditions before the feature is actually activated.
NiceHash’s countdown suggests that the upgrade will occur at 1:00 UTC on Saturday, Nov. 14. Another countdown website, Taproot.watch concurs with that estimate, suggesting that there are just 339 blocks left to mine at the time of writing.
Anticipation around the upgrade was likely one of the factors driving Bitcoin’s market surge this week. The price of Bitcoin hit all-time highs on Tuesday and Wednesday, reaching a market value of $68,521 and $69,044 on those days respectively.
It remains to be seen whether Saturday’s upgrade will lead to greater highs, or whether the hype around Taproot has been exhausted.
Disclaimer: At the time of writing this author held less than $100 of Bitcoin, Ethereum, and altcoins.
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Taproot Is Coming To Bitcoin: How It Works, Its History And Implications
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Why You Should Care About Taproot, The Next Major Bitcoin Upgrade
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Bitcoin Core 22.0 Released: What’s New
Today marks the official release of Bitcoin Core 22.0, the 22nd major release of Bitcoin’s original software client launched by Satoshi Nakamoto almost 13 years ago.
Overseen by Bitcoin Core lead maintainer Wladimir van der Laan, this latest major release was developed by well over a hundred contributors in a span of about eight months. The result of roughly 800 pull requests, Bitcoin Core 22.0 is the first major Bitcoin Core release to support the upcoming Taproot protocol upgrade, while also offering several other improvements over previous Bitcoin Core versions.
As an aside, this is also the first Bitcoin Core release to drop the leading 0 from its version number: it’s Bitcoin Core 22.0 — not Bitcoin Core 0.22.0.
Below are some of the more notable changes.
Hardware Wallet Support In The GUI
Hardware wallets are special purpose devices designed to keep private keys secure, that can sign transactions without the private keys ever leaving the device. Still, in order to transact, hardware wallets generally do need to be used in combination with a software wallet. A number of software wallets have the required compatibility to do this, but the Bitcoin Core wallet was for some time not one of them.
This started to change a few years ago: Bitcoin Core has been compatible with hardware wallets since version 0.18.0. However, users had to initially use the command-line interface (CLI) to use this feature. Since Bitcoin Core 0.20.0, users could partially use the graphical user interface (GUI) as well, but this still required some manual copy-pasting to sign transactions.
Bitcoin Core 22.0 is the first Bitcoin Core release to offer full GUI support for hardware wallets. By using the Hardware Wallet Interface (HWI) software as a sort of add-on, Bitcoin Core users will be able to smoothly use the Bitcoin Core wallet in combination with devices from Ledger, Trezor, BitBox, KeepKey, and Coldcard.
I2P Support
One way to de-anonymize Bitcoin users is to analyze the Bitcoin network and track from which nodes specific transactions originate. The IP-addresses associated with these nodes can then be tied to real-world identities.
To protect their privacy, Bitcoin Core users could already connect to the Bitcoin network through the anonymizing Tor network. But Tor is not the only anonymizing network.
The Invisible Internet Project (I2P) is another decentralized, peer-to-peer, anonymous communication network layered on top of the regular internet. Like Tor, it lets users communicate by routing messages across a network, using different layers of encryption for each step in the transmission chain to mask both the message itself, as well as the sender’s and the receiver’s IP-addresses.
(The difference between Tor and I2P is subtle, and beyond the scope of this article. But in short, I2P is said to have a more distributed solution for mapping the network, which is needed for message routing. It would also be better geared towards supporting hidden services, like websites that are only available on the I2P network itself. Tor, in contrast, is said to have better support for exit nodes, which allow users to communicate with the regular internet.)
Bitcoin Core 22.0 now supports connecting to the Bitcoin network through I2P as well. After Tor, this makes I2P the second anonymity network that Bitcoin Core users can utilize to shield their IP address from peers on the Bitcoin network, allowing them to better protect their privacy.
Taproot Support
Bitcoin Core 0.21.1 was the first Bitcoin Core release to include activation logic for the upcoming Taproot protocol upgrade, which will activate this November. Now, Bitcoin Core 22.0 is the first major release to support the upgrade.
Most obviously, this means that Bitcoin Core 22.0 will fully validate the new Taproot rules. From the moment that the upgrade activates this November, all Taproot transactions will be checked for validity according to the new protocol rules.
Additionally, the Bitcoin Core wallet will support the creation of basic Taproot outputs (“addresses”). Bitcoin Core users will be able to accept payments to Taproot outputs that can be spent with a single private key, but that is protected using the Taproot logic.
Of course, this doesn’t actually offer many benefits (if any) compared to what was already possible with the Bitcoin Core wallet software before; the more complex types of smart contracts that Taproot supports will presumably be supported in future Bitcoin Core releases.
Under the hood, Bitcoin Core will also support the creation of Taproot-specific descriptors, which identify Taproot outputs as such. This categorization could benefit applications that rely on the Bitcoin Core software, like (external) wallets.
Testmempool Accept Update
Package relay is an ongoing project to upgrade how transactions are transmitted over the Bitcoin network. Right now, transactions are only relayed if they include a high enough fee to be included in the memory pool (mempool) of Bitcoin nodes. If a transaction doesn’t include a high enough fee, it is not accepted by a node, and not forwarded to other nodes on the Bitcoin network.
This logic differs a little bit from how transactions are selected for inclusion in a new Bitcoin block, however. To determine whether a transaction is included in a block, a transaction’s fee isn’t just considered on its own, but it is also taken into account whether that transaction would help to get other transactions confirmed. If so, the combination of transaction fees is considered.
This allows users to get a transaction with a low fee that is waiting in the mempool “unstuck”, by re-spending the coins in a new transaction with a high fee to compensate. To get the second (higher) fee, miners will want to accept both transactions at the same time. This trick is called Child-Pays-For-Parent (CPFP) and can be particularly useful in the context of some Layer Two protocols like the Lightning Network.
The difference in policy between mempool inclusion and block inclusion can in some cases thwart the CPFP solution. If the first transaction doesn’t include a high enough fee to be accepted in mempools in the first place, a new transaction to re-spend the coins with a higher fee will not be accepted in a block, because it needs the first transaction to also confirm before it is considered valid.
To solve this, package relay would enable that transactions are transmitted over the Bitcoin network in packages. Instead of considering transactions and their fees individually, combinations of transactions would be considered for mempool inclusion, just like it happens for block inclusion.
Bitcoin Core 22.0 includes a step towards realizing package relay: applications connected to Bitcoin Core can test if transactions would be included in their own mempools, by submitting several transactions as a single package. Transmitting or accepting such packages over the peer-to-peer network is not yet supported in this release, however.
Larger Segwit Multisigs
Multi-signature (multisig) outputs are coins that require signatures from multiple private keys in order to be spent. This can for example be two signatures from two different private keys, or three signatures from a set of five private keys, or even seven signatures from a set of eight private keys, and so on.
Multisig can be used for several purposes. One example is to secure funds using several devices so that even if one device is compromised or lost, the coins are still safe and accessible. Similarly, multisig can be used to share control over funds between several people, requiring cooperation between them to spend the coins. In addition, multisig is used in some Layer Two solutions.
The Bitcoin Core software until now supported the creation of multisig outputs for up to 16 keys in Segregated Witness (Segwit) outputs, even though the Bitcoin protocol has no such limit. Bitcoin Core 22.0 now expands Segwit multisig capability to 20 keys.
For more details and other changes, see the Bitcoin Core 0.22 release notes. You can download Bitcoin Core 22.0 here.