At 05:15:27 UTC today, 2021-11-14, with the mining of block 709632, the “Taproot” changes to the Bitcoin protocol went into effect. This is a “soft fork” which is 100% compatible with existing Bitcoin addresses and wallet software: holders and users of Bitcoin need not do or change anything as a result of these changes.
The changes are defined in three Bitcoin Improvement Proposal (BIP) documents:
- BIP 340 “Schnorr Signatures for secp256k1”
- BIP 341 “Taproot: SegWit version 1 spending rules”
- BIP 342 “Validation of Taproot Scripts”
The changes introduce a new form of signature to the Bitcoin blockchain, called a Schnorr signature, which will reduce the size of the blockchain and fees paid to publish transaction on it. (The Schnorr signature algorithm was the subject of U.S. patent 4,995,082, which expired on 2010-02-23 and thus can be used royalty-free in Bitcoin.)
The Taproot changes define a new form of Bitcoin public address which extends the existing “Segregated Witness (SegWit)” protocol to support hashing arbitrarily complex spend scripts into a compact representation that reduces transaction size, improves privacy by hiding the nature of the spend transaction, and allows for implementation of various kinds of “smart contracts” on the Bitcoin blockchain.
Here is an overview of the Taproot changes from Bitcoin Magazine.
This is a more detailed technical look at the changes from a talk at the Halifax Bitcoin Meetup.
Over time, Bitcoin wallets and client software may be expected to provide new features which take advantage of the reduced transaction costs, improved privacy, and more powerful transaction capability provided by Taproot, but existing Bitcoin addresses (in all their myriad forms) will continue to be valid as long as the Bitcoin blockchain exists.