Taproot

Taproot is a bitcoin protocol upgrade that activated at block 709,632 on November 14, 2021, the network's most significant change since SegWit in 2017. Specified in BIPs 340, 341, and 342, it introduced Schnorr signatures, Merkelized script trees, and a new output type with addresses beginning bc1p.

How it works

A Taproot output commits to both a public key and, optionally, a hidden tree of alternative spending scripts. If all parties agree, the output is spent with a single Schnorr signature on the key path, and the blockchain shows nothing but an ordinary-looking payment. Only when cooperation fails does a script path get revealed, and even then only the branch actually used. Schnorr signatures also allow multiple signers to aggregate into one signature via protocols like MuSig2, so a multisig arrangement can look identical to a single-key payment, improving both privacy and fee efficiency. These features enable point time locked contracts for Lightning and other advanced constructions. An unanticipated side effect of Taproot's relaxed script limits was the Ordinals inscription wave that began in 2023.

In the gold vs bitcoin debate

Taproot demonstrates the property gold cannot have and bitcoin's critics often overlook: the protocol improves without changing its monetary core. The upgrade activated as a backward-compatible soft fork after roughly 90% of hashrate signaled readiness, and the 21 million cap sat untouched throughout. Bitcoin's defenders cite this as evidence that conservative evolution and fixed monetary policy can coexist.