Four years after the in-fighting that came with the last upgrade to the Bitcoin blockchain, Taproot – the most recent and possibly the most significant upgrade to date – has been approved by miners all across the globe.
These unprecedented levels of consensus among those involved in keeping the world’s most popular crypto currency running mark a critical point in the development and adoption of digital assets.
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The upgrade – dubbed Taproot – is set to spruce up the Bitcoin network by increasing transaction efficiency and privacy, while also incorporating the potential for smart contracts being built on Bitcoin’s blockchain – bringing it up to speed with competitors like Ethereum.
Bitcoin Gets The Goods
The changes to Bitcoin revolve around digital signatures, which can easily be compared to one’s own fingerprint – leaving an identifiable digital mark on every transaction one makes.
And if you are looking to start your bitcoin transactions, you could open an online bitcoin wallet and get going within minutes.
In its current state, Bitcoin’s blockchain relies on “Elliptic Curve Signatures”. The Taproot upgrade will transition the blockchain over to a mechanism known as Schnorr Signatures, with the aim of rendering multi-signature transactions unreadable. However, this does not mean that transactions on the Bitcoin blockchain become anonymous – it means that simple transactions will be harder, if not impossible, to differentiate from the more complex ones.
As for smart contracts, Taproot promises to make them significantly more cost-effective to deploy and reduce the overall size of their footprint on the block chain.
“The most important thing for Taproot is smart contracts. It’s already the primary driver of innovation on the ethereum network. Smart contracts essentially give you the opportunity to really build applications and businesses on the blockchain.” As the CEO of cryptocurrency mining specialist Marathon Digital Holdings, Fred Thiel, told CNBC.
These developments are expected to fully play out in November of this year and could have a major impact on Bitcoin demand. The possibility of building and deploying smart contracts on the BTC blockchain could trigger a shift away from its current state of being a digital replacement for gold through newfound utility.
