Change in Bitcoin Blockchain: Taproot and Schnorr Signature
This has been another important year for the evolution of Bitcoin.
Yes, it is true that it was in the year 2021 that new price records were reached, but this brief article seeks to talk about the technological evolution related to the Bitcoin blockchain network.
In Bitcoin the price-related factor goes hand-in-hand with the technology-related factor. Yes, Bitcoin only gained notoriety and utility as a valid and serious asset because there was and still is a lot of demand for it, this reflects the price. But Bitcoin’s technology has proven that it is not just a game currency or digital tulips, technology is what allows Bitcoin to be a scarce, decentralized asset and proof of censorship.
About the Changes in Bitcoin
From a technological point of view, Bitcoin has been a huge success since the network started operating in 2009.
However, like any software the Bitcoin protocol was in need of improvement over time and as the number of people participating in the network increased.
In 2017, a major change was implemented in the source code and another major change is expected in this year 2021.
The change in the Bitcoin protocol in 2017 was a soft fork called Segwit, which aimed to allow more transactions to be inserted into the same block on the network and to make the blockchain have better integration for applications such as the Lightning Network.
All changes, even soft forks, are suggested by Bitcoin developers or other people who follow the project, then are evaluated by the developer community, miners and other interested parties. The proposals for changes are debated to exhaustion and after there is something close to a consensus in which several parties understand the changes as necessary, they are implemented and technically tested, and finally they are implemented in the blockchain network for adoption of the protocol that contains the changes. However, if there are only a few parts that do not want the changes, they can keep the past version.
Soft and Hard Forks
Explaining quickly. A hard fork can be understood as a big and drastic change in the source code and that eliminates the compatibility of the software with past versions, that is, users of the software need to choose between using the past version or the version with the implemented changes. In the case of software that can be an investment asset at the same time, a currency of exchange or reserve of value obviously the hard fork is not that desirable.
A soft fork on the other hand, maintains the compatibility of the software with past versions and users do not necessarily have to choose between versions of the software. The changes are for the evolution and improvement of the protocol, but the blockchain network remains the same. The 2017 Segwit and the 2021 Taproot and Schnorr Signature are considered soft forks.
Taproot and Schnorr Signature
The Taproot soft fork aims to increase privacy in Bitcoin network transactions. Currently, the different types of transactions possible on the network end up being an identifier related to the way a given network user uses or manages his bitcoins. With the implementation of Taproot all different types of transactions on the network will have the same types of output, all that will be shown is a peer to peer transaction.
About the Schnorr Signature soft fork, technically it is a significant change considering that the type of cryptographic signature (Elliptic Curve Digital Signature Algorithm — ECDSA) that has existed in Bitcoin since its creation and which was implemented by Satoshi Nakamoto will be changed.
Cryptographic signatures serve, among other things, to protect and store transaction data on the network. The move is aimed at using a smaller, faster signature in terms of processing, this should reflect in lighter data transactions and therefore cheaper. The new type of cryptographic signature must also allow multi-signature transactions, that is, transactions that can only be valid when more than one party signs and agrees. This will be important in optimizing the use of smart contracts within Bitcoin. No, Bitcoin is not implementing functionality to compete with the Ethereum network. Bitcoin has always had the possibility of using smart contracts, but its architecture and network were not created for this purpose. The Ethereum network, on the other hand, was born with a specific focus on being a platform for executing smart contracts.
The Evolution and improvement of the Protocol
Among so many things that fascinate me and so many other enthusiasts of the Bitcoin blockchain network, is the way the protocol evolves. The network is already very functional and stable, but it is interesting to know that its evolution occurs after thorough analysis in relation to the best methods that can be implemented. Like the very essence of Bitcoin, its changes can be suggested by a single individual, but are analyzed by many in many different places with different types of knowledge and only after this long journey are they actually implemented for use.
This type of process makes the network and the technology more solid and considering that the knowledge about the technology is gradually spreading among society, it is possible that more people around the world will be able to see not only the monetary value of Bitcoin, but like this monetary value is intrinsically linked to the soundness of the technology.
Thanks for reading!