Everything You Need to Know about Bitcoin Taproot Upgrade
An introduction to the Bitcoin Taproot upgrade, its impact on the Bitcoin blockchain, and its projected release date.
Concerns about Bitcoin’s environmental impact and scalability issues have been surrounding the crypto sphere for a while now.
However, a new Bitcoin upgrade called Taproot will significantly revolutionize the Bitcoin blockchain’s infrastructure.
The expectations and results with this Bitcoin upgrade will begin a new movement for the entire crypto and blockchain space.
This article takes a closer look at the Bitcoin taproot upgrade, the new features and advantages of the Bitcoin blockchain, and its projected release date.
An Introduction to Bitcoin Taproot Update
Four years after the ‘last civil-war upgrade,’ the Taproot update has now been approved by crypto miners worldwide.
The update is projected to be fully functional in November 2021. The Bitcoin taproot update allows higher efficiency and complete privacy while making transactions.
With this update, the Bitcoin blockchain will also be able to unlock the functionality of smart contracts. The Taproot upgrade of Bitcoin would ensure smart contracts run efficiently and at a much cheaper cost.
Until now, smart contracts were running only on the Ethereum network as it allows higher efficiency.
Contrary to Bitcoin’s last upgrade in 2017 called the ‘last civil war,’ Taproot has almost universal support as these changes show incremental advancement in the code. Taproot includes the Lightning Network and the Schnorr signatures as its new best features.
Why the Upgrade Matters?
Let’s take a look at the significant changes in the blockchain network with the taproot update.
Privacy - The taproot can make complex transactions like those that require multiple signatures or those with delayed-release. Taproot promises to enhance privacy through simple indistinguishable transactions in terms of on-chain footprint. However, this does not mean Bitcoin enhanced anonymity.
Lower transaction costs - The data size of the various complex Bitcoin transaction would be reduced, and hence the cost of transactions made would be lowered subsequently.
Smart contracts functionality - The new Taproot update shall allow a new type of signature to enhance the functionality of smart contracts. This will make complicated conditions for transactions much cheaper and easier.
Scalability - Lightning Network involves a layer two solution that ensures faster and more scalable payments that anchor in aggregate form to the chain of Bitcoin. Taproot would make transactions on the Lightning Network a lot cheaper and faster. Lightning Network also ensures privacy to the transactions and amplifies speed.
Robust - After the 2017 block size increase, Taproot ensures high productivity and mitigates infrequency tagged along with the previous Bitcoin update.
The Taproot upgrade will help boost Bitcoin’s functionality and further broaden the use-cases of its ecosystem. The most important impact for investors would be to accept Bitcoin as technological advancement.
Many a time, technology falters as they’re linked with codes, bugs, and other incidents. There is over $1 trillion of market value that Bitcoin holds currently.
It is important to mitigate the risk to an almost negligible level. Taproot upgrade shall allow investors to look at Bitcoin as a relatively new technology that evolves with time. It not only promises safety in the investing market but is efficient and durable.
Impact on the Bitcoin Blockchain
Bitcoin’s newest introduction of the ‘digital signatures’ is almost like a fingerprint an individual uses for their transactions.
While up until now, cryptocurrency was using the ‘Elliptic Curve Digital Signature Algorithm’, which ensures the customer’s safety, Taproot update would introduce what is called the Schnorr signatures.
This kind of signature would help multiple transactions be unreadable and ensure further privacy by not tracing the key’s exposure.
Schnorr signatures allow programs to reveal the exact rules used for each transaction, except for all of them. This shall allow complex transactions on the chain as is with normal transactions. This not only ensures privacy but also saves space on the block and makes transactions faster.
Along with increased privacy, the upgrade also ensures anonymity. With greater anonymity in the public blockchain, it will ensure transactions are indistinguishable from one to another.
The functionality of smart contracts, along with cheaper transactions, will also give Bitcoin a new landscape for (DeFi) and NFT applications.
When will the Taproot Upgrade be Launched?
It is reported that the Taproot update would not be issued until November 2021. Developers need more time to test the update ahead of its time to reduce the likeliness of something going wrong.
Update processes are tested and retested repeatedly for a long time to avoid any glitches before being deployed. In 2013, an update that went wrong nearly brought down the Bitcoin value in halves.
Bottom Line
While the Taproot upgrade is expected to not only significantly improve Bitcoin’s usability, it will also represent Bitcoin as an excellent store of value due to its technological advancements.
Moreover, it will cater to some of the prevailing concerns faced in its blockchain, including environmental issues and scalability challenges.
