By
Bhushan Akolkar
April 26th, 2024
The major thing with the Taproot upgrade is that it will introduce the smart contract functionality on the Bitcoin network while exponentially increasing its utility.
Bitcoin miners worldwide have finally approved the first major Bitcoin network upgrade in four years dubbed Taproot. This is one of the biggest milestones for the world’s largest cryptocurrency.
The activation of the Taproot upgrade will happen ahead of this year in November 2021. The Taproot upgrade will bring greater transaction efficiency and privacy. Besides, the most important thing is that it will unlock the smart contract features for the Bitcoin blockchain. this will help to eliminate the middlemen during the most complex transactions. The data from Taproot.watch shows the completion of the lock-in stage.
Taproot has received universal support as it brings some fairly incremental improvements to the code. Speaking to CNBC, Alyse Killeen, founder and managing partner of bitcoin-focused venture firm Stillmark said:
“Taproot matters, because it opens a breadth of opportunity for entrepreneurs interested in expanding bitcoin’s utility”.
Learning from the past mistakes, the Bitcoin community has unanimously agreed to a delayed released of Taproot. This will give leeway to developers and miners for testing ahead of the actual launch. Thus, careful testing, retesting and several iterations before deployed are advisable. This also prevents clients and miners in the Bitcoin protocol from getting out of sync.
“Upgrades allow the – extremely remote – possibility of a bug entering the system, which would destroy confidence in the whole cryptocurrency system, effectively wiping it out – a ‘self-inflicted wound’ if you like,” said Jason Deane, an analyst at Quantum Economics.
Key Changes Coming Along with Bitcoin (BTC) Upgrade Taproot
The recent makeover of the Bitcoin protocol has to do majorly with digital signatures. Currently, the Bitcoin network relies on the “Elliptic Curve Digital Signature Algorithm” based on a private key controlling the Bitcoin wallet while ensuring that only the rightful owner can spend those BTC.
Taproot will replace digital signatures with Schnorr signatures. This will make multi-signature transactions unreadable thus allowing greater privacy. This happens since the private keys won’t have as much exposure on the Bitcoin blockchain. Brandon Arvanaghi, previously a security engineer at crypto exchange Gemini said:
“You can kind of hide who you are a little bit better, which is good”.
Besides, the introduction of Schnorr signatures is very important for smart contracts. Taproot will smart contracts smaller and cheaper based on the space they occupy on the blockchain network. This enhanced efficiency and functionality will unlock massive potential for the Bitcoin network.
Taproot will also enable smart contract execution on Bitcoin’s Layer-2 solution Lightning Network, a payments platform enabling instant transactions.
“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,” explained Fred Thiel, CEO of cryptocurrency mining specialist Marathon Digital Holdings.
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