Why Bitcoiners Need to Pay Closer Attention to the Taproot Activation Process
Even the most active participants in the Bitcoin space may not be intimately familiar with the proposed upgrade to the Bitcoin software, Taproot. A concise explanation for the purpose of Taproot is that the software update seeks to add more smart contract functionality to the Bitcoin code, in addition to privacy improvements. This article is not going to be a detailed discussion regarding Taproot, as there are far more superior sources for such information; moreover, this article also does not seek to take a position on Taproot as an upgrade, though by all appearances it seems that the software is mostly favorable within the Bitcoin community at large, anecdotally speaking. The purpose of this post is to encourage the reader to look past the Taproot update itself, and pay closer attention to the activation process that is taking place, as the various outcomes of the Taproot signaling term could potentially have a considerable impact on Bitcoin — even leading to a ‘coin split.’
The potential for conflict, as Taproot is concerned, boils down to how Taproot achieves activation into the Bitcoin network. The leading Bitcoin software client, Bitcoin Core, is using a Taproot activation protocol named Speedy Trial. Speedy Trial allows for a three month period for Bitcoin miners to signal support for Taproot when they mine Bitcoin blocks (known as a miner-activated soft fork). If 90% of the blocks mined include support for Taproot within any two-week difficulty adjustment period inside the three month time frame, then Taproot will go live across the Bitcoin network sometime in November. If this does not occur, then the Taproot activation on Bitcoin Core will fail, and developers will have to go back to the drawing board as far as Taproot activation is concerned.
So far, so good, right? Where does the potential for a ‘coin split’ factor into the equation?
Enter Bitcoin Taproot, a software fork of Bitcoin Core and concurrent implementation client for the Taproot upgrade. Bitcoin Taproot uses the ‘LOT= true’ activation protocol for Taproot, which is a controversial activation method in the Bitcoin community. LOT=true, short for Lock-in On Timeout, is an activation scheme in which nodes will only accept signaling blocks, and will reject non-signaling blocks, after the signaling period for Taproot ends. The scheme is contentious in Bitcoin circles because the implementation activates Taproot whether 90% of miners signal approval for the upgrade or not, which could potentially render the client out of consensus with Bitcoin Core’s rule set if Speedy Trial fails, thus forking Bitcoin Taproot into its own chain (a coin split). Many months ago, when the various Taproot activation methods were being discussed in Bitcoin developer circles, the LOT=true method was in competition with another activation method LOT=false. LOT=false is what essentially became the Speedy Trial framework, as LOT=false simply expires at the end of the signaling period if less than 90% of miners signal for Taproot, thus avoiding any coin split scenario since nodes would still accept non-signaling blocks. To bring this all home, Bitcoin Taproot is the de facto client for the hardcore pro-Taproot crowd, and it will be interesting to see what becomes of this client if 90% of miners do not signal their support for Taproot following this activation attempt. If Taproot fails, will Taproot supporters go back to the drawing board, or will they lobby for the Bitcoin Taproot chain as the ‘true’ Bitcoin? Time will tell.
If Taproot fails, it very well could activate at another time using a different method (perhaps via a user-activated soft fork). If 90% of miners do signal in favor of Taproot, then Bitcoin should continue on as it has for more than a decade now, assuming network participants choose the Speedy Trial version of Bitcoin Core as the true Bitcoin. What feels certain is that the Bitcoin Taproot client will become an altcoin if the 90% signaling threshold is not met, and Bitcoin Core would continue to be the true client for the Bitcoin software.
In summary, no Bitcoiner wants there to be conflict within the Bitcoin community, but there will be conflict in any community that includes human beings. Hopefully, no matter what occurs as Taproot is concerned, the Bitcoin community will press on with a wide consensus for what constitutes the true Bitcoin network. With a spirit of optimism, every Bitcoiner should pay close attention to the Taproot activation process and the subsequent effects on the network, with the hope that any outcome will only serve to strengthen the network.
You should always consider seeking financial advice from a licensed advisor before making decisions with your money, and you should not consider anything I write as financial advice but merely my opinion. Getting your financial house in order is a prerequisite for Bitcoin saving, in my opinion.
Disclosure: nothing in this article should be considered financial advice and I am not a financial advisor. Do your own research as everything in finance carries risk.