Technology

What Precautions You should take in Bitcoin on the day Taproot is activated

Key facts:
  • Taproot will reach Bitcoin at the height of block 709,632.
  • Although unlikely, a network fork is possible if the nodes are not upgraded to Taproot.

Taproot is just around the corner and you can already speculate about what lies ahead for its activation that will occur around November 16. One possibility is that, with less than 50% of miners upgraded to Taproot, the network will fork into two different “Bitcoins.” Although this is very unlikely.

Bitcoin Optech, technical portal about Bitcoin, has published or this Wednesday, November 3, in its weekly section “Preparing for Taproot”, a special on what will happen with this activation.

With block number 709,632 arrived, Bitcoin nodes with versions 0.21.1 and 22.0 of the Bitcoin Core client will begin processing transactions containing Taproot.

However, an adverse scenario is possible: that less than 50% of the nodes are updated, and bitcoin is forked. However, the chances of this happening are very low. According to data from the portal of Luke Dashjr, developer of Bitcoin Core, currently 51% of the nodes are updated to Taproot. In previous days, as reported by CriptoNoticias, the figure only reached 49.79%.

The number of nodes upgrading to Taproot has been growing slowly, even though the soft fork will occur in less than 2 weeks. Source: Luke.dashjr.org.

As a reference to this type of fork, Bitcoin Optech cites what happened with the soft fork of the improvement proposal (BIP) number 66 in 2015. At the time of that update, the network forked into at least 6 blocks, marking a precedent within Bitcoin.

The risk of forking still present in Bitcoin

The BIP-66 fork was due to miners starting to validate “invalid” blocks on a new chain. What happens in this type of situation is that, once the miner realizes and wants to return to the original chain, all confirmed transactions are invalidated, belonging to another blockchain.

With this in mind, it is advisable to wait for at least 6 block confirmations to consider an irreversible bitcoin payment.

The scenario that the network may fork may still exist when Taproot is enabled. This would only happen if miners deliberately mined invalid blocks of the Bitcoin main network. These would use Taproot outputs, but disabling the security measures established within the Bitcoin Core protocol.

For a miner to be motivated to mine invalid blocks voluntarily, he must be willing to lose 6.25 BTC (about $380,000) for the blocks he mins. That scenario looks unlikely, as considered by Bitcoin Optech.

The best and most likely outcome is that everything will go well. Nothing that happens should be visible to normal users. Only those who carefully monitor their nodes or try to create Taproot transactions should notice anything.

Preparing for Taproot #20, Bitcoin Optech.

Recommendation during Taproot activation

As already mentioned throughout the text, Taproot arrives in block 709.632. Although the scenarios of possible forks are very remote, Bitcoin Optech recommends taking precautions for possible complications.

The main one is in the number of confirmations. Due to the antecedent of the BIP-66, Optech recommends placing a confirmation window greater than six blocks, even reaching 30 confirmations. This while finally activating Taproot.

This will ensure that, in case the network is forked while Taproot is activated, the payment confirmation transaction is validated within the correct Bitcoin network. This recommendation must be taken into account before the activation of Taproot, i.e. in block 709.631, at the latest.

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