TAPROOT

To the devout, Bitcoin’s codebase is treated as holy scripture that should remain unsullied by the work of later generations adding their own spin to it. For this reason, despite birthing the BIP mechanism that provides a framework for implementing upgrades, Bitcoin rarely changes.

While anyone can submit a BIP for peer review and if approved the modification will make it into a future protocol update, in practice, such upgrades are infrequent. The primary objective of Bitcoin’s stewards is to keep the network operating flawlessly – which means eschewing untested or unnecessary pieces of code that do not fortify its core properties.

Taproot, however, was a Bitcoin enhancement that was always destined to make it into code – even if its architects could not have imagined how long the process would take. Whereas most BIPs are niche and known only to a few hundred Bitcoin developers, Taproot’s reputation extended industry-wide. It had, after all, been the upgrade tabled as the sequel to SegWit – the controversial code that prompted the Blocksize Wars of 2017 and split the Bitcoin community in two.

Although formally introduced by Bitcoin Core developer Gregory Maxwell on January 23, 2018, Taproot’s origins can be traced back further, having arisen in response to the limitations of Bitcoin’s scripting language, which make it difficult to implement complex logic onchain. 

When Maxwell outlined his proposal for Taproot, the Bitcoin community was still bruised from the SegWit debacle and there was no desire to implement another hard fork. Mercifully, Taproot avoided this pitfall. By cleverly combining existing and well-understood cryptographic concepts, it promised great efficiency and privacy and would be backward-compatible – meaning it wasn’t reliant on miners signalling approval or at risk of causing a chain split.

But like any BIP, there were still hazards that must be considered before the proposal could be implemented. And few pieces of Bitcoin code, short of perhaps Segwit itself, were studied more intensely than Taproot.

Unpacking Taproot

Taproot incorporated two cryptographic primitives in Schnorr Signatures and MAST (Merkelized Abstract Syntax Trees). Just as Satoshi’s genius was to combine existing technologies in new ways, Taproot’s innovation lay not in the individual components, but in their synthesis. Maxwell recognised that for almost any smart contract, there is a “cooperative” outcome where all parties agree. This cooperative case could be represented by a single, aggregated Schnorr signature.

While the specifics of Taproot’s design escaped all but the biggest of Bitcoin developer brains, the industry grasped its utility. Updating Bitcoin’s scripting language would not only enhance privacy – Bitcoin’s lack of which was becoming glaringly apparent – but support new opcodes or even new signature schemes via soft forks without causing network fractures. Taproot didn’t just promise to make Bitcoin better from a technical perspective, therefore, but also from a political one by reducing the likelihood of contentious hard forks ever being forced upon network users.

In contrast to 2017’s SegWit drama, there was no significant opposition to Taproot: virtually all major mining pools and node operators agreed on its activation. By June 2021, miners had already reached the ~90% threshold needed to lock in the upgrade, thanks in no small part to the efforts of Alejandro De La Torre, who helped coordinate its implementation. In a Substack post, he wrote: “If any pool operators are reading this, please reach out. The Poolin team and I will assist you in any way we can.” This hands-on support was crucial in achieving the 90% threshold required for lock-in.

In November 2021, following extensive testing and developer feedback, Taproot was activated, marking the beginning of a new chapter for the Bitcoin protocol. Initial adoption of Taproot for its intended purposes – standard transactions, multi-sig wallets, and Lightning Network channels – was slow but steady in the year following activation.

But in early 2023, Taproot adoption experienced a dramatic surge triggered by the launch of the Ordinals protocol, which used Taproot's script-path spending capabilities to inscribe data onto the blockchain. Its popularity caused the Taproot adoption rate to skyrocket, at times exceeding 50% of all Bitcoin transactions. This use case had not been anticipated, but despite the criticism Ordinals attracted from certain quarters, it was proof that the technology was working. Taproot had come of age.