Last updated on December 1st, 2021 at 06:49 pm
- The highly anticipated upgrade of Bitcoin was activated on Sunday the 14th day of November 2021 at block 709,632.
- This is a major update happening right after Segwit, a major update in 2017 which helped bitcoin to scale.
- Just as technology evolves, bitcoin technology is not left out.
What is Taproot?
Taproot is a soft fork upgrade to the bitcoin protocol. The Taproot update means greater transaction privacy and efficiency – and crucially, it will unlock the potential for smart contracts, which can be used to eliminate middlemen from transactions.
Some features on the taproot upgrade
- The Schnorr signing algorithm is linear, meaning that multiple signatures for the same message can be aggregated into a single signature.
- Better privacy
- Cheaper multisig
- Single-sig and multisig will be mostly indistinguishable
- Lightning improvements- PTLCs and aggregate keys as channel anchors
- A boost for scripting with DLCs, Adaptor Signatures, and Taptrees
What does this mean to Bitcoin?
The taproot upgrade to bitcoin means the following to transactions:
- More scalability
- Increased privacy by making it more difficult to track transactions based on public wallet addresses.
- Security
- Cheaper transactions
- Unlocked potential of smart contracts on Bitcoin
Will taproot affect the price of Bitcoin in the long run?
Relative to Ethereum, Bitcoin has been more limited in terms of functionalities such as smart contracts. The possibility of smart contracts, following the Taproot upgrade, may lead to new innovations on the Bitcoin blockchain and, if that happens, it may positively impact the usage and price of BTC.
Similarly, a major threat to bitcoin has been privacy. Now that privacy issues are being tackled, some bitcoin experts foresee a larger and better future for Bitcoin.
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