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Creating a Bitcoin Taproot account in Ledger Live

This article describes the Taproot upgrade to the Bitcoin network, how it affects Ledger users, and how to create a Bitcoin Taproot account in Ledger Live.

What is Taproot?

Taproot is Bitcoin’s latest and most significant network upgrade since SegWit in 2017. Taproot consists of a bundle of improvements to the Bitcoin protocol. These improvements are expected to boost Bitcoin’s privacy, efficiency, and smart contract or scripting capabilities. You can learn more about Taproot and how it improves Bitcoin here.

Taproot automatically activated at block height 709,632 on November,14th 2021.

Taproot activation was done via a soft fork. A soft fork is an optional change to the rules of the Bitcoin network that needs to be approved by each Bitcoin node. Fortunately, the Taproot upgrade is backward compatible. Backward compatibility means that nodes that have upgraded to Taproot still retain full compatibility with nodes that have not.

Ledger fully supports Taproot and is bringing its full capabilities to all Bitcoin users.

What changes for me?

With Taproot now supported by Ledger, you are able to create a new type of Bitcoin account in Ledger Live: a Taproot account.

Taproot accounts join the list of available Bitcoin account options alongside Legacy, SegWit, and Native SegWit accounts (more on these account types here).

Depending on your Ledger device, creating a Taproot account first requires a series of updates.

Ledger Nano X Ledger Nano S
  1. Update Ledger Live through the notification banner or download the latest release of Ledger Live from the Ledger Live download page. Learn how to update Ledger Live.
  2. Open Ledger Live and connect your Nano X device to My Ledger.
  3. Ensure that your Ledger device is running the latest version. If not, please update.
  4. Update the Bitcoin app to at least version 2.1.0 or higher.
  5. Navigate to the Accounts tab and click the +Add account button.
    Add account window appears.
  6. In the drop-down menu, select Bitcoin (BTC) then click Continue.
  7. Toggle Show all address types, select a Taproot account, click Add account then Done.

    Please note: The GIF above displays the "Manager" tab, which has now been renamed to "My Ledger."

Can I send Bitcoin from a Taproot account to a non-Taproot account?

  • Yes, Taproot accounts are fully compatible with non-Taproot accounts.
  • This means that you can safely send BTC from a Taproot account to a Legacy, SegWit, and Native-Segwit account and vice versa.

Why should I use a Taproot account?

Taproot accounts can create more efficient and private Bitcoin transactions.

Taproot introduces an improved cryptographic scheme called Schnorr signatures. Transactions that leverage Schnorr signatures take up less space inside Bitcoin blocks and are easier to verify. While this won’t translate into a dramatic reduction in transaction cost, Taproot users might notice a slight improvement in overall transaction speed and a very mild reduction in fees.

Regarding privacy, Taproot harmonizes the on-chain footprint of Bitcoin transactions. Without Taproot, it’s very easy for a malicious actor to observe the Bitcoin blockchain and tell a transaction involving multiple signatures (also known as a multisig transaction) from a transaction involving only one signature.

Multisig transactions are typically used to secure large amounts of Bitcoin so their users would rather not have their transactions easily flagged on the blockchain.

By aggregating any number of signatures into a single signature, Taproot can create transactions that all look identical on the Bitcoin blockchain, regardless of how many signatures were involved. As Taproot slowly becomes the new standard for transacting on Bitcoin, so will privacy improve for all Bitcoin users.

On a final note, Taproot also helps Bitcoin scale because signature aggregation reduces the cost of creating and executing complex Bitcoin transactions such as creating Lightning Network channels. You can learn more about the Bitcoin Lightning Network here.

As updates continue to occur with Taproot and Bitcoin, we will continue to provide secure and transparent information for you to use your Ledger devices seamlessly.

For additional information follow @Ledger and @LedgerSupport.

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