 So what is Taproot? Taproot is Bitcoin's first update in four years. The last Bitcoin update was back in 2017 which was the divisive segwit update which spawned Bitcoin Cash. Now Bitcoin's highly anticipated Taproot update has been accepted by more than 90% of the blockchain's mining hash rate over the weekend. This signals that the majority of the community is ready to implement the update to the protocol. In this video we're going to talk about how the Taproot update improves Bitcoin and how it will affect Bitcoin in the future. So what is Taproot? Taproot is a soft fork that improves Bitcoin's scripts to increase privacy and improve upon other factors related to the complex transactions. Transactions on the Bitcoin network can use various features that make them more complex including time lock releases, multi-signature requirements and others. Without Taproot anyone can detect transactions that can use those complex functionalities which require the creation of multiple transactions. However the Taproot upgrade will make it possible to cloak all the moving parts of a Bitcoin transaction that includes these features. So even if the transactions adopt those features they will look like a single transaction. This is a big win for Bitcoin privacy advocates. Taproot makes it possible to hide the fact that a Bitcoin script ran at all. For example spending Bitcoin using Taproot can make a transaction in a lightning network, a peer-to-peer transaction or a sophisticated smart contract become indistinguishable. Anyone monitoring one of these transactions would see nothing but a peer-to-peer transaction. It's worth noting though that this doesn't change the fact that the wallets of the initial sender and final recipient will be exposed. Taproot is expected to be implemented along with another upgrade called Schnorr signatures. This not only makes Taproot's implementation possible but also enables a much anticipated feature called signature aggregation. So what are Schnorr signatures? Schnorr signatures consist of a cryptographic signature scheme developed by Klaus Schnorr, a German mathematician and cryptographer. Even though Schnorr had his algorithm protected under a patent for many years, the patent officially expired in 2008. Among a number of benefits Schnorr signatures are primarily known for their simplicity and efficiency in generating short signatures. The signature scheme adopted by Satoshi Nakamoto, the creator of Bitcoin, was the elliptic curve digital signature algorithm. The choice of ECDSA over the Schnorr signature algorithm was due to the fact that it was already widely used, well understood, secure, compact and open source. The development of the Schnorr digital signature scheme may be the starting point of a new generation of signatures for Bitcoin and other blockchain networks. One of the main advantages of Schnorr signatures is that they're able to take multiple keys inside a complex Bitcoin transaction and produce a signal unique signature. This means that the signatures from the multiple parties involved in the transaction can be aggregated into a signal Schnorr signature. This is known as signature aggregation. So how will Taproot benefit Bitcoin? As we've already discussed, Taproot will bring major improvements to Bitcoin's privacy. When combined with Schnorr signatures, Taproot may also boost efficiency when performing transactions. Besides enhanced privacy, other potential benefits include reduced amount of data to be transferred and stored on the blockchain, more transactions per block and lower transaction fees. Another benefit to Taproot is the fact that signatures will no longer be malleable, which is a known security risk in the Bitcoin network. Simply put, signature malleability means that it's technically possible to alter the signature of a transaction before it gets confirmed. By doing this, the attack would make it appear as if the transaction never happened. This leaves Bitcoin exposed to the infamous double spending problem, which could ruin the integrity of the distributed ledger. So what is the current status on this upgrade? Bitcoin miners, those who mint blocks on the network had to literally signal that they supported the upgrade during a two week period. The difficulty of mining Bitcoin adjusts every 2016 blocks or about two weeks. This depends on how quickly miners are creating new blocks. The goal is to average a new block every 10 minutes. In order for the upgrade to go through, 90% of mined blocks during that period needed to include data from the miners known as a signal bit. If the threshold wasn't met, miners had another chance during the next two week period up until August 11. After several times failing to hit the 90% threshold, the network's miners reached the target on June 12 with two months to spare. Assuming nothing goes wrong, Taproot will go live in November. Why 90%? Bitcoin is a global project with millions of stakeholders, including developers, miners, institutions, and individuals. As such, there needs to be a broad buy-in for substantive changes. The standard process for getting buy-in is to submit a Bitcoin improvement proposal, or BIP. BIPs include code changes to the Bitcoin protocol and can be put forward by anyone. Community members decided on a proposal for adoption called Speedy Trial. This gave a three-month period for miners to signal with a 90% threshold needed for activation. So in closing, Taproot is a highly anticipated and widely supported upgrade to Bitcoin. When it gets implemented in November along with Schnorr signatures, we will see significant improvements in terms of privacy, scalability, security, and more. Regardless of your involvement in the Bitcoin community, this will likely impact your experience using Bitcoin.