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3. Advanced Course

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  1. 1. What is Taproot?
  2. 2. Blockchain bridges – what are they?
  3. 3. What is Ethereum Plasma?
  4. 4. What is Ethereum Casper?
  5. 5. What is Zk-SNARK and Zk-STARK? 
  6. 6. What is Selfish Mining? 
  7. 7. What is spoofing in the cryptocurrency market? 
  8. 8. Schnorr signatures - what are they? 
  9. 9. MimbleWimble - what is it? 
  10. 10. What is digital property rights in NFT?
  11. 11. What are ETFs and what role do they play in the cryptocurrency market? 
  12. 12. How to verify a cryptocurrency project – cryptocurrency tokenomics 
  13. 13. What is the 51% attack on blockchain?
  14. 14. What is DAO, and how does it work?
  15. 15. Zero-knowledge proof – a protocol that respects privacy 
  16. 16. What is EOSREX?
  17. 17. What is Proof of Elapsed Time (PoET)?
  18. 18. Mirror Protocol – what it is? 
  19. 19. What are synthetic assets? 
  20. 20. How to create your own NFT? 
  21. 21. Definition of DeFi, and what are its liquidations?
  22. 22. New identity system - Polygon ID
  23. 23. Ethereum Foundation and the Scroll protocol - what is it?
  24. 24. What is Byzantine fault tolerance in blockchain technology?
  25. 25. Scalability of blockchain technology - what is it?
  26. 26. Interchain Security - new Cosmos (ATOM) protocol
  27. 27. Coin Mixing vs. Coin Join - definition, opportunities, and threats
  28. 28. What is Ethereum Virtual Machine (EVM) and how does it work?
  29. 29. Soulbound Tokens - what are they, and how do they work?
  30. 30. Definition of LIDO - what is it?
  31. 31. What are Threshold Signatures, and how do they work?
  32. 32. Blockchain technology and cyberattacks.
  33. 33. Bitcoin script - what it is, and what you should know about it.
  34. 34. What is zkEVM, and what are its basic features?
  35. 35. Do confidential transactions on blockchain exist? What is a Confidential Transaction?
  36. 36. Algorithmic stablecoins - everything you should know about them.
  37. 37. Polygon Zk Rollups ZKP - what should you know about it?
  38. 38. What is Web3 Infura?
  39. 39. Mantle - Ethereum L2 scalability - how does it work?
  40. 40. What is the NEAR Rainbow Bridge?
  41. 41. Liquid Staking Ethereum and LSD tokens. What do you need to know about it?
  42. 42. Top 10 blockchain oracles. How do they work? How do they differ?
  43. 43. What are Web3.js and Ether.js? What are the main differences between them?
  44. 44. What is StarkWare, and recursive validity proofs
  45. 45. Quant Network: scalability of the future
  46. 46. Polygon zkEVM - everything you need to know
  47. 47. What is Optimism (OP), and how do its roll-ups work?
  48. 48. What are RPC nodes, and how do they work?
  49. 49. SEI Network: everything you need to know about the Tier 1 solution for DeFi
  50. 50. Types of Proof-of-Stake Consensus Mechanisms: DPoS, LPoS and BPoS
  51. 51. Bedrock: the epileptic curve that ensures security!
  52. 52. What is Tendermint, and how does it work?
  53. 53. Pantos: how to solve the problem of token transfer between blockchains?
  54. 54. What is asymmetric encryption?
  55. 55. Base-58 Function in Cryptocurrencies
  56. 56. What Is the Nostr Protocol and How Does It Work?
  57. 57. What Is the XDAI Bridge and How Does It Work?
  58. 58. Solidity vs. Rust: What Are the Differences Between These Programming Languages?
  59. 59. What Is a Real-Time Operating System (RTOS)?
  60. 60. What Is the Ethereum Rinkeby Testnet and How Does It Work?
  61. 61. What Is Probabilistic Encryption?
  62. 62. What is a Pinata in Web 3? We explain!
  63. 63. What Is EIP-4337? Will Ethereum Account Abstraction Change Web3 Forever?
  64. 64. What are smart contract audits? Which companies are involved?
  65. 65. How does the AirGapped wallet work?
  66. 66. What is proto-danksharding (EIP-4844) on Ethereum?
  67. 67. What is decentralised storage and how does it work?
  68. 68. How to Recover Cryptocurrencies Sent to the Wrong Address or Network: A Practical Guide
  69. 69. MPC Wallet and Multilateral Computing: Innovative Technology for Privacy and Security
  70. 70. Threshold signature in cryptography: an advanced signing technique!
  71. 71. Vanity address in cryptocurrencies: what is it and what are its characteristics?
  72. 72. Reentrancy Attack on smart contracts: a threat to blockchain security!
  73. 73. Slither: a static analyser for smart contracts!
  74. 74. Sandwich Attack at DeFi: explanation and risks!
  75. 75. Blockchain RPC for Web3: A key technology in the world of decentralized finance!
  76. 76. Re-staking: the benefits of re-posting in staking!
  77. 77. Base: Evolving cryptocurrency transactions with a tier-2 solution from Coinbase
  78. 78. IPFS: A new era of decentralized data storage
  79. 79. Typical vulnerabilities and bridge security in blockchain technology
Lesson 1 of 79
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1. What is Taproot?

Blockchain needs to grow and evolve, whether it’s a Bitcoin, Ethereum, or other cryptocurrency network. With Soft Forks, it is possible to modify consensus rules on the blockchain to improve operations. Taproot on Bitcoin is just such a Soft Fork. What changes did the biggest update to Bitcoin since SegWit in 2017 introduce? 

History of the update

On November 14, 2021, an update to the Bitcoin network, Taproot, went into effect. Since the introduction of SegWit, Bitcoin’s Taproot has been the most anticipated event. What did the upgrade introduce? Taproot changed the performance of BTC scripts, improved privacy, scalability, and security. The update took place alongside another related enhancement – the Schnorr identification scheme. The update was proposed by Greg Maxwell in January 2018. He developed Bitcoin Core. In 2020, Taproot was included in the Bitcoin Core library, after a pull request by Pieter Wuille. Finally, it received support from 90% of miners and was officially activated on block 709 632.

Taproot – what does it mean to Bitcoin?

The name ‘Bitcoin Taproot’ comes from the English word ”taproot” – something that is the deepest, and strongest, part of a plant. It is completely the same with this update. It changes the Bitcoin system, but partly also the philosophy of this asset. At the same time, it brings new features – in the areas of security and scalability.

Taproot for Bitcoin is a soft fork. Its main purpose was to address privacy and other flaws in Bitcoin. For the update to go live, it had to be approved by many network users. In the case of a soft fork, two scenarios are possible. The update is activated by miners (MASF) or by users (UASF). In the case of Taproot, the choice to rely on miners has been controversial. This also distinguishes it from hard fork, where it is the entire network that has to agree to it.

The update consisted of three parts: the Tapscript, Schnorr Signatures and Taproot. Bitcoin Improvement Proposals (BIP) – BIP 340, 341 and 342 introduce each of these parts. For better understanding, we will now explain each of them.

Tapscript

This is a new form of Tapscript that was included in BIP 342. It is the one that enables Pay-to-Taproot (P2TR) payments. What does this mean? Users will be able to choose to transact using Schnorr’s public key or any method completely integrated into the network. This gives the user the choice of whether the transaction should be anonymous or public – depending on the use case. Additionally, Tapscript will provide newer forms of transaction validation.

Schnorr signatures

Until Taproot was activated in block 709 632, Bitcoin used the Elliptic Curve Digital Signature Algorithm (ECDSA). This authentication protocol was not obvious even to Satoshi Nakamoto, who from the beginning wanted to use Schnorr signatures; unfortunately, they were patented, and their implementation would have delayed the publication of Bitcoin’s Whitepaper.

Schnorr’s signatures work in such a way that multiple keys enter a transaction and are validated with a single signature. To put it simpler – if multiple users enter one transaction, they will be anonymized and only one transaction will appear. Schnorr’s signatures are smaller than traditional signature or Bitcoin keys. This will save on fees, and also more transactions will fit in one block. Bottom line – with signatures, we gain faster block validation and more transactions per second.

The new process retains common rules with the old one, as both protocols belong to the same elliptic curve family. Nevertheless, its usability has increased tenfold compared to the old system.

Taproot

Taproot is part of BIP 341. BIP 341, refers to all three script updates and contains the data necessary to correctly integrate Tapscript and Schnorr Signatures. The benefits of these new features are enormous and should enable greater security, confidentiality, and scalability for Bitcoin.

What has Taproot changed?

Taproot addresses the following limitations of the Bitcoin network:

  • Improved transaction privacy.
  • Lower transaction costs.
  • Higher TPS (the number of transactions the network processes each second).
  • Increased scalability, by reducing the amount of data required to be transferred and stored on the blockchain.
  • No ability to change the signature of a transaction.
  • Increases the possibility of smart contracts, while maintaining privacy.
  • Transactions on the block to an observer look the same, despite internal changes.

Summary

By now, you know how important this update was for Bitcoin as a whole. This is a massive extension for this flagship cryptocurrency. The update was so automatic that users didn’t even notice the new functionality.

Nevertheless, it is a milestone for the further development of the chain. Taproot is also a good foundation for further improvements to the entire BTC ecosystem.

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