If you were around for the 2017 Bitcoin hard fork, you will well remember what a shitshow that became.
Eventually the fork resulted in a chain split that produced the segwit-enabled BTC as we know it today, and BCH which is a minor coin today. In August 2017 however, it was far from obvious which chain would be called “Bitcoin”, and it understandably brought a lot of turmoil to the markets.
The 2021 network upgrade is called Taproot.
Key points about the Taproot softfork:
- Taproot will make some types of transactions cheaper and more private.
- It will help the network scale.
- In the long run, the upgrade might wreck on-chain analysis.
Pros and Cons of Taproot
- Taproot changes the way multisig transactions are done. It will make them cheaper and more private.
- Multi-signature transactions are used by exchanges and institutions, so this will positively impact all users that buy or trade bitcoin.
- But Taproot also makes multisig transactions such as exchange withdrawals impossible to tell apart from the rest of the transaction activity, which will cancel some parts of on-chain analysis.
- Another drawback is a possible privacy leak in light wallets such as Electrum. This will depend on how the wallet developers will approach upgrading the software for Taproot though.
Miners have to start signaling for or against it until August 2021.
So far, the majority of miners is signalling against Taproot.
The narrative explains that away by saying that miners are hardware-wise not organized well enough to upgrade their Bitcoin Core version so soon.
Might be.
But knowing that “forgetting” to flip a switch somewhere in your mining farm is a sure way to send the markets on a rollercoaster, without the chance of having a three-letter agency coming to kick your ass, what would you do?
Here is a list of tools to watch Taproot signalling
| Resource | What it does |
|---|---|
| taproot.watch | Displays how miners signal for or against Taproot with each new block. |
| twitter memes | Twitter memes under the hashtag Taproot show what the community big-mouths think |
| braiins on Taproot | Long article that explains in detail what Taproot does with privacy and on-chain analysis |
If you made an app to follow Taproot signalling or sentiments, we’ll be happy to add it to the list. Contact the author through the link below.