On November 14, 2021, at block 709,632, Bitcoin underwent its most significant update since 2017 — and almost no one noticed. No applications broke, no wallets needed urgent updates, and no users had to do anything. This was intentional, and the lack of noise is part of what the update signifies.
The update is called Taproot, and it brings together three interlocking changes. The first is a new type of signature, proposed by German cryptographer Claus-Peter Schnorr back in the 1980s and patented by him until 2008 — which explains why Satoshi didn't use it. The patent expired, Bitcoin could use it, and the difference is a property the old signature didn't have: it is linear.
Linear means that signatures add up. Three people with three keys can produce a single signature that verifies against the sum of the three public keys. From the outside, the result is indistinguishable from a regular payment made by just one person. A three-of-three multisig no longer announces to the world that it is a multisig, no longer takes up the space of three signatures, and now costs the same as one.
The second change is the tree of conditions. Previously, a lock with ten clauses had to publish all ten, even if only one was used. With Taproot, the conditions are organized into a tree of hashes — the same idea as a merkle root — and the spender only reveals the branch they used. The other nine never appear on the blockchain, and no one ever knows they existed.
The third is the combination of the two, and it is the most elegant. Every Taproot address has a key path and a script path. If all parties involved agree — and in day-to-day transactions, they almost always do — they sign together via the key path, and the entire tree of conditions is never revealed. The clauses are kept for the day when someone doesn't cooperate.
The effect on privacy is what matters most. A Lightning channel closure, a two-of-three family vault, a time-locked inheritance, and a trivial coffee payment all appear exactly the same on the blockchain. It’s not anonymity — the network remains public, as the lesson on privacy will emphasize. It’s the elimination of a label that previously came free to observers.
It's worth comparing with 2017, and the comparison is the political point of the lesson. The dispute that year was ugly because it involved who decides the block size and, with it, who captures the fees. Taproot didn't take power from anyone: those who wanted to use it could, and those who didn't could continue exactly as they were. The activation was done through a method called Speedy Trial, a three-month window in which miners signaled support, and support exceeded 99%. There was no war because there was nothing to dispute.
And it's worth being honest about the result three years later. Adoption is slow: many wallets still provide addresses starting with bc1q, and the privacy Taproot offers only truly works when many people use it — a small crowd hides little. Furthermore, the first large-scale application of the new format wasn't any of the anticipated ones: it was the recording of images and texts within transactions, which sparked an entire discussion about what the network is for.
Before getting to that discussion, it's necessary to understand how Bitcoin changes rules without having anyone to decide. Taproot was the easy case. There was a difficult case, which lasted two years, divided the community, and ended with two coins. In the next lesson, the forks.