Bitcoin Core has activated the soft fork Taproot with block 709632 being mined.
The soft fork went live at block 709632, which currently has 2493 transactions under its belt. While majority consensus is all that is required to put into effect a soft fork, a hard fork on the other hand necessitates the entire network to agree, invalidating prior blocks.
The Taproot patch improves privacy for users of multi-signature transactions while also allowing smart contracts to be used on the Bitcoin network. Bitcoin smart contracts, in comparison to Ethereum smarts contracts, offer limited options.
After the 2017 Segregated Witness (SegWit) upgrade, Taproot is the first major network update. Bitcoin Core developer Gregory Maxwell first teased a new soft fork in January 2018. Following consensus changes over three Bitcoin Improvement Proposals (BIPs), namely (i) Schnorr signatures (BIP340); (ii) SegWit output conditions (BIP341); and (iii) Validation of taproot scripts (BIP342), Taproot was approved virtually unanimously on June 13, 2021. Schnorr signatures and the Taproot construction standard are defined under BIP340. By combining several signatures into one, the three BIPs are supposed to enhance Bitcoin privacy and space efficiency. Pay-to-Taproot is a sort of payment enabled by BIP342, facilitating transactions using a Schnorr public key or other methods. It can give users the option of making some transactions public and others private.
The Script programming language used to write Bitcoin smart contracts enables for conditions to be defined, such as funds only being paid out after a particular amount of time has passed or other circumstances are met. Bitcoins are locked in one script before being locked and unlocked in another. According to a research paper, “When Bitcoin is sent to a MAST output, the Bitcoin is locked to the Merkle root of these scripts, and to redeem the bitcoin, the spender must reveal the script which they are using to unlock the bitcoin, as well as proof that this script is included in the Merkle root of the previous transaction.”