Hi friends,
Another week, another edition of The ₿it Economy! This week saw the price of Bitcoin close in on $19,000 as well as a new initiative to activate Taproot. And per usual, if you have any thoughts I'd love to hear from you. My goal is to shed a tidbit of info that I believe will get you thinking about the digital world around you. So if you know anyone who would be interested, please do forward this along, send them to the archive, or have them subscribe here. 👇
Activation Energy
About a month ago, the implementation of Schnorr/Taproot consensus rules was merged into the Bitcoin Core repository and it gave rise to a new conversation — How should it be activated? Well without going too much into the details (you can refer to Issue #14 for that), Taproot is a protocol proposal upgrade originally developed to improve the privacy, efficiency and flexibility of Bitcoin scripts.
As the story goes, after the contention SegWit2x debacle in 2017, consensus and governance have been widespread discussion topics in the Bitcoin community over the past few years. While making changes to Bitcoin Core may seem trivial to some, the politics associated with various proposals have sparked major debates on the development process. So Poolin, the second largest bitcoin mining pool according to hash power, implemented an initiative to facilitate consensus regarding the activation of Taproot. Through a publicly verifiable portal, they have invited managers of the other pools to answer a series of questions that will assist the community in the best way to activate Taproot. The questions are as follows:
Do you accept the Taproot update?
What activation method do you prefer?
What percentage of the hashrate threshold must be reached to activate it?
As of November 20th, the results are as follows:
All of the above mining pools are reputable and seem keen on helping Bitcoin achieve the next level of proficiency. Another important point is that in being a soft fork, Taproot is non-intrusive and backwards compatible.
"Soft forks can be activated in several ways. Multiple of the previous soft forks were activated using BIP9, which required a supermajority of hash power to signal support for the upgrade. BIP8 is the successor of BIP9. BIP8 gives the option to activate the upgrade at the end of the signaling period even without a supermajority of miners signaling support. In the listed activation proposals below, the ‘true’ or ‘false’ indicates whether a signal period would end in activation. BIP9 worked equivalently to BIP8 without activation at the end."
It's important to remember that miners do not vote, rather they vouch to run the Taproot software. And though there is over 50% of hashrate vouching to activate the softfork, the method is still highly contentious. In the end you cannot please everyone and some will undoubtedly be upset with the chosen activation method. But the bitterness will be short lived as Bitcoin users will be able to enter complex smart contract arrangements secured by the Bitcoin network. In the end, this is a necessary step for Bitcoin development.
Threads🧵
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News 📰
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Market Watch 💸
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What I'm Reading 📕
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What I'm Listening To 🔊
Give your eyes a break and pop in the earbuds.
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What I'm Watching 📺
Take a break from Netflix and check these out.
Wyoming Senate-elect Cynthia Lummis
Lightning Labs' Olaoluwa Osuntokun AMA
Housekeeping 🏡
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Final Quote 🎩
Thanks for reading. Send me tips, stories I’ve missed, or comment below. And if you liked this piece, you can sign up here for more issues of the Bit Economy, a newsletter on something bitcoin related.
Until then, have a great week! See you next Sunday.