What’s the meaning of Bitcoin Taproot Upgrade? The main aim of cryptocurrency is to make perfect money. For a digital currency, perfection is close to impossible. Bitcoin is still being worked on to improve it. Bitcoin runs on its bitcoin protocol. This protocol is the underlying blockchain network used to mine transactions and manage transactions. If an upgrade is not vetted well, Bitcoin’s history is fraught with cautionary tales of what can go wrong.
Recently, the Bitcoin network has approved a new update called “taproot.” This is the first most significant update to cryptocurrency exchange since SegWit (Segregated Witness) in 2017. The main aim of the upgrade was to take away some signature data in transactions to carve out more room within the blocks for transactions. The Bitcoin Blockchain would therefore become faster.
Some people thought the upgrade did not go as far as it was supposed to. Hence, they treated Bitcoin as an investment vehicle instead of usable currency. They felt Bitcoin needed larger block sizes that would allow it to be transacted cheaply and quickly like cash. This initiated a hard fork to form Bitcoin Cash.
Effects of the Bitcoin Taproot
It also led to a hard fork of the network in which one blockchain splits into two separate ones. Edul Patel said that the previous upgrade was referred to as ‘civil war.’ Edul Patel is the CEO and Co-founder of Mudrex, an algo-based crypto trading platform. This upgrade caused a massive ideological divide.
Taproot upgrades have way fewer critics than Segregated Witness. The main conflict on taproot is over how to make it a reality.
Taproot upgrade has received unanimity from the majority of Bitcoin stakeholders. As a result, cryptocurrency experts believe this could be a decisive moment for the world’s most significant cryptocurrency. This is so because the support from miners in accepting the upgrade is overwhelming.
Over the years, thousands and thousands of cryptocurrencies have come into this marketplace. Also, several changes have been implemented in the existing cryptocurrencies.
What is a taproot upgrade?
Taproot upgrade aims at letting more people use wallets and services that make it hard to figure out who paid who. This will enhance anonymity features lifted by advocates of the currency. However, law enforcement says that it is used for unlawful purposes.
This is a significant upgrade that will cause transaction privacy and network efficiency. It also has the potential to implement smart contracts onto the Bitcoin blockchain. Taproot upgrade will allow smart contracts to run cheaply and efficiently. Intelligent contracts mean two parties or organizations can work together securely without using go-betweens. This is one major implementation that would save people a lot of money in the future. The Ethereum network has already implemented smart contracts because of its higher efficiency.
The Bitcoin network uses the ‘Elliptic Curve Digital Signature Algorithm, which occupies a lot of space. Taproot upgrade for Bitcoin will allow smart contracts to use lesser space in the network. With taproot, the previous signature will be switched to ‘Schnorr signatures”. This will make the simple transactions potentially identical to the complex transactions. This changes the network to greater anonymity. A smart contract is the key selling point for taproot.
Taproot upgrade will help Bitcoin have the potential to elevate itself and integrate with mainstream finance. Furthermore, Bitcoin is a public blockchain; hence, anyone will monitor the transaction on the network. Therefore, running smart contracts on Bitcoin’s core protocol layer is not very important. It is costly and time-consuming as a result, rendered almost useless.
Smart contracts have so many advantages. They can be used for almost any trivial financial transaction like paying utility bills and paying rent. They will also help Bitcoin make more complicated transactions less visible. Hence, large organizations can make more significant transactions for custody purposes without drawing the attention of hackers.
The benefit of the Bitcoin Taproot upgrade
All parties in a transaction can agree to make these complex transactions look like standard, person-to-person transactions. This will be done by combining their public keys to create a new public key. Also, combine their signatures to create a unique signature. This process will be done through a device called Schnorr signature.
The taproot will enhance privacy while reducing the amount of data needed to make them. Therefore, lowering transaction costs that have become much higher as Bitcoin has become more popular.
However, the privacy benefits will extend to applications that use time-locked contracts like CoinSwap. This mixes Bitcoin transactions to confuse the coin’s origin and destination.
Brains behind Bitcoiin taproot upgrade
In 2018, Gregory Maxwell proposed the taproot upgrade. Mr. Gregory is the Bitcoin core developer. He was also the Chief Executive Officer of Blockstream, which created the open-source software. Bitcoin Core is the leading software client for Bitcoin. It allows clients to interact with the blockchain. For example, when you download the Bitcoin Core, you can validate transactions on the Bitcoin blockchain.
Edward Snowden is not in support of the upgrade. In May 2021, he said that the Taproot upgrade might worsen Bitcoin privacy during the Ethereal summit. Bitcoin developers were not in support of his assessment. Edward Snowden is the former National Security Agency contractor who blew the whistle on the United States phone surveillance program.
Taproot current status
Bitcoin miners who mine new blocks on the network signaled to show they support the upgrade. The difficulty in mining Bitcoin adjusts every two weeks or every two thousand blocks. This depends on how quickly miners are creating new partnerships. The main goal is to average a new block every ten minutes.
For the upgrade to get a pass, 90% of mined blocks must include data from miners called signal bits during the two weeks. If the threshold is not met, miners have another chance during the two weeks up to 12 August.
On 12 June, the network miners reached the target after failing to hit the 90% threshold several times.
If all goes well, the Taproot upgrade will go live in November.
When the upgrade is expected to be implemented
Taproot upgrade is due to arrive in November. It needs time to ensure the changes are bug-proof and everything runs smoothly. This is vital if Bitcoin is to prove itself as a viable financial system. Taproot is a very soft upgrade; hence it does not need to change the way it works for everyone. Old wallets will still function even with a taproot. It also leaves others to choose whether they want to take advantage of the upgrade’s new features.
Impact of Bitcoin taproot upgrade
The type of revolution that the taproot upgrade will bring will be phenomenal.
The upgrade will position Bitcoin to cement its hold on the top of the cryptocurrency market.
New functionalities will bring more cooperation on board, pulling focus from rivals and giving Bitcoin actual utility.
Verdict of Bitcoin Taproot Upgrade
Taproot looks like the positive future of Bitcoin. It sounds like it will be the new element that will propel it into the mainstream.
It will increase the privacy features in Bitcoin.
Taproot upgrade will make the world’s oldest and most prominent cryptocurrency, Bitcoin, more competitive with cryptocurrencies. In addition, it will make cryptocurrency more user-friendly and enhance its ease of usage. All these will lure more investors.
I think that is the future of Bitcoin.
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