Anticipating Bitcoin’s Taproot Upgrade, Here’s What You Need to Know

Taproot will bring smart contracts to bitcoin and fully unleash the power of the Lightning Network while enhancing privacy protections.

article-image

Blockworks exclusive art by Axel Rangel

share

key takeaways

  • The first major upgrade to the Bitcoin network since 2017 occurs this weekend
  • “Bitcoin Core is now officially out of beta! 🚀 “, wrote Bitcoin developer Matt Whitlock in a discussion of the new version 22.0

The Bitcoin network is activating Taproot, one of its most significant updates since 2017, when Segregated Witness, also known as “SegWit,” was first integrated to address bitcoin’s scaling problem.

According to NiceHash’s countdown timer, the move to Taproot is scheduled to take place early Sunday UTC. The upgrade seeks to address the bitcoin network’s 2021 problem, which is programmability. 

With the Cambrian explosion-like growth of decentralized finance (DeFi) during the last year, where its total locked-in value rocketed to nearly $100 billion, bitcoin effectively sat on the sidelines. Sure, bitcoin can be used as collateral via an Ethereum wrapper, but the lack of Bitcoin’s programmability meant its reliance on these projects to access DeFi markets. 

Tapscript, Taproot’s programming language, will attempt to solve this. While not as powerful as the programming languages available on the Ethereum Virtual Machine, it’s miles ahead of the primitive scripting language currently available to the Bitcoin network.

A Bitcoin Core milestone

The governance of Bitcoin Core — which, to avoid confusion, Blockworks refers to canonically as simply ‘Bitcoin’ — is a slow and deliberative process. In fact, the Taproot upgrade marks a visible shift in Bitcoin history: its version number. Despite the original release of v0.1 having been way back on January 8, 2009, the intervening 12 years have seen the version number rise to just 0.21.1. At that rate, Bitcoin would not reach a 1.0 version until the late 2060s!

Instead, the project’s core contributors reached a consensus in late 2020 to call the version that activates Sunday v22.0. The rationale from the original proposer was simple. “Honestly I’m just tired of all of the people asking for ‘1.0’ that maybe this’ll shut them up. Skip the whole 1.0 thing and go straight to version 22.0!” he wrote on October 22, 2020.

After over a month of discussion, at a time when bitcoin was trading hands for around $18,500, developer Matt Whitlock chimed in with a comment that looks prescient in retrospect:

I’m surprised nobody mentioned the obvious implication here: Bitcoin Core is now officially out of beta! 🚀Advancing the version number to something greater than 1.0 sends the signal that the software is now ready for prime time.”

One small step, but a step that reflects the maturity of a network that now secures $1.2 trillion in BTC assets.

Learning from the past

Since 2017, the analytical toolkits available to track movement and flow of that BTC on the Bitcoin network has also dramatically increased in availability and granularity. Nansen, which closed a $12 million round this summer, offers the ability for its users to seek actionable trading opportunities by monitoring fund flow from whale or institutional wallets. 

Taproot aims to solve this problem through something called the Schnorr Signature algorithm. Schnorr Signatures allow for all digital signatures on a transaction to be combined into one, so a Lightning transaction would not appear to be much different from a regular one. This boosts privacy and allows tighter integration of Lightning into the Bitcoin network, which reduces transaction costs due to combining transactions.

Unlike the introduction of SegWit, which triggered considerable debate among the Bitcoin community and led to the creation of bitcoin cash, Taproot doesn’t seem to have much, if any, opposition. According to a mining pool tracker, Taproot-Activation, nearly all mining pools have approved the upgrade.

Likewise, the price of bitcoin hasn’t moved much as the activation date got closer. It was trading at $64,200 with 8 hours to go before the upgrade, according to CoinGecko, up about 5% in the last 14 days. By contrast, during the SegWit upgrade, the price of bitcoin rallied in anticipation, and nearly doubled afterward.

Macauley Peterson contributed reporting for this story.


Get the day’s top crypto news and insights delivered to your inbox every evening. Subscribe to Blockworks’ free newsletter now.


Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

recent research

LTIPPanalysis.png

Research

This report is a retroactive analysis of Arbitrum's Long Term Incentives Pilot Program (LTIPP). We collect relevant data at a protocol level and review bi-weekly updates to analyze recipients, their strategies, and the impact of the incentives on high level growth metrics. In particular, we want to highlight outperformers and underperformers, and glean any best practices or lessons learned for protocols distributing ARB incentives in the future. The overarching goal is to synthesize lessons learned that the DAO can reference as it begins thinking about future incentives programs–namely, the working group for incentives that is being actively discussed–especially as Timeboost introduces new conditions for trading and economic activity.

article-image

Sponsored

AI project Zerebro intersects the spheres of artificial intelligence, finance, art, music, and culture

article-image

Allmight is focused on furthering the United States’ leadership in crypto

article-image

The conditions Charles Schwab is waiting for before jumping headfirst into crypto could take shape soon

article-image

The FCA’s director of payments and digital assets shared some takeaways from chats with crypto companies and law firms

article-image

Let’s take a look at how US equities typically perform this time of year and what we might see in the coming days

article-image

Lumina introduces transparency and permissionless integration via an OP stack-based optimium, challenging traditional oracle designs