Bitcoin Taproot/Schnorr upgrade: A Soft Fork proposed for the Bitcoin blockchain to improve fungibility, the functionality of Smart Contracts, and privacy by making all transactions appear the same to external blockchain observers.
Along with the Halving, Taproot/Schnorr upgrade is one of the most expected Bitcoin events in 2020.
Bitcoin is a cryptocurrency that’s built on blockchain – a highly secure decentralized transaction network. Proof-of-Work validation system makes it trustworthy, though there’s an existing problem of low transaction speed. For example, the Bitcoin network currently supports only 7 transactions per second. To compare, the matching engine on BTCMEX delivers up to 100,000 TPS.
Different on and off-chain solutions were implemented or proposed to improve the scalability of cryptocurrency. Taproot/Schnorr upgrade is one of them. It was first proposed by Bitcoin Core developer Greg Maxwell in January 2018 and is reported to be ready to be implemented in 2020.
Taproot offers to bring privacy to a new level by making all transactions appear the same to observers of blockchain data, which brings significant implications for scaling, fungibility and script innovation. Taproot is expected to be bundled with a related upgrade – Schnorr. Taproot/Schnorr Soft Fork was earlier proposed in May by Bitcoin Core developer Pieter Wuille. Unlike in the Hard Fork event, when a new cryptocurrency is created, a Soft Fork occurs when old network nodes do not follow a rule followed by the newly upgraded nodes.
Schnorr suggests the improvement of the current Bitcoin Elliptic Curve Digital Signature Algorithm with a single Schnorr signature, which can reduce transaction size, save fees, and improve privacy. The Bitcoin community would benefit from the implementation as well. However, as the Bitcoin community enters 2020, there are a number of other notable proposals on the horizon as well.
Apart from the on-chain solutions, like soft and hard forks, there are second layer innovations, that allow fast and cheap transactions. For example, the Great Consensus Clean-up or a second layer like Lightning Network.