Taproot is one of the most important upgrades in Bitcoin’s history. Activated in November 2021 at block 709,632, it marked the first major change to the Bitcoin protocol since Segregated Witness (SegWit) in 2017.
The goal? To make Bitcoin more private, scalable, and flexible—all while laying the groundwork for new features like Bitcoin-based NFTs, known as Ordinals.
Why Bitcoin Needed Taproot
Bitcoin’s codebase is famously conservative. Changes don’t come often because any upgrade requires overwhelming consensus among miners, developers, and node operators. Without broad agreement, upgrades can split the community—something that happened in 2017 when opposition to SegWit created Bitcoin Cash.
To avoid repeating that drama, developers took a slow, careful approach with Taproot. First proposed by Gregory Maxwell in 2018 and drafted into a formal improvement proposal in 2019, Taproot finally gained traction when more than 90% of miners signaled support in mid-2021. The upgrade went live later that year through a soft fork, meaning nodes that didn’t update could still run without breaking consensus.
What Taproot Changed
Taproot wasn’t a single change but a bundle of three Bitcoin Improvement Proposals (BIPs) introduced together because they relied on one another.
1. BIP340 – Schnorr Signatures
Before Taproot, Bitcoin used the Elliptic Curve Digital Signature Algorithm (ECDSA) to validate transactions. The problem: each signature had to be checked individually, which slowed things down and made multi-signature wallets easy to spot.
Schnorr signatures solved both issues. They allow multiple signatures to be combined into one, cutting down on data and making bulk transactions faster and cheaper. They also make multi-sig transactions harder to identify, boosting privacy.
2. BIP341 – Taproot & MAST
This proposal introduced Merkelized Abstract Syntax Trees (MASTs), a technical way of storing only the part of a transaction that was actually used, rather than every possible outcome. That means less data clogging the blockchain and greater efficiency.
3. BIP342 – Tapscript
Tapscript updated Bitcoin’s scripting language to support Schnorr and MAST. While largely an enabler, it also future-proofed Bitcoin by making it easier for developers to build new features.
Why Taproot Matters
The upgrade improved Bitcoin in three big ways:
- Privacy: Multi-sig and complex transactions now look more like simple ones.
- Scalability: Batched signatures and reduced data storage mean faster, cheaper transactions.
- Flexibility: Tapscript opens the door for future upgrades and use cases.
From Taproot to Ordinals
For about a year, Taproot saw slow adoption. That changed in January 2023 with the launch of Ordinals, a protocol that lets users inscribe digital assets—like images or audio—directly onto individual satoshis (the smallest unit of BTC).
Ordinals effectively turned satoshis into Bitcoin NFTs, an unexpected but wildly popular use case. The reason it became possible? Taproot’s changes to the “witness” data field and Tapscript’s expanded capacity. Thanks to Taproot, inscriptions can now be as large as 4MB—the full size of a Bitcoin block.
Taproot wasn’t just a technical fine-tuning—it was a milestone. By combining Schnorr signatures, MAST, and Tapscript, the upgrade made Bitcoin transactions cheaper, more private, and more versatile, while unlocking whole new categories of applications like Ordinals.
It also proved something bigger: that Bitcoin can evolve cautiously but meaningfully without sacrificing its core principle of decentralization.
