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The Bitcoin Taproot upgrade has received practically universal support. The introduction of self-executing smart contracts with less space occupancy on the Bitcoin blockchain improves scalability.
The Bitcoin community is celebrating another huge milestone for the network. A long-awaited Taproot upgrade, which is the largest Bitcoin (BTC) upgrade in four years, has been activated.
What has it brought to the blockchain? It ensures enhanced transaction efficiency and privacy and, what is even more important, it will help t discover the capacities of smart contracts. As a result, it will become possible to exclude middlemen from the transactions happening on the network.
The Bitcoin (BTC) Taproot upgrade has received practically universal support which may seem quite surprising but at the same time quite explainable. The introduced changes presuppose significant code improvements.
At the time of writing Bitcoin (BTC) is trading at $65,755 which means that the price has gained 1.5% over the last 24 hours.
Additional Details about BTC Taproot Upgrade
Locked earlier this year in June 2021, the Bitcoin Taproot upgrade has taken seven years in the making. As noted, Taproot brings some crucial privacy changes to the Bitcoin network. The Bitcoin Taproot brings greater privacy by obscuring complicated transactions on the network. Besides, it also makes them lightweight and low cost.
Furthermore, the Bitcoin Taproot upgrade also enhances blockchain efficiency by unlocking the potential for smart contracts. This will put it at par with other powerful competitors like Ethereum.
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”.
The most important part of the Bitcoin Taproot upgrade is digital signatures. These are basically fingerprints that individual leaves on every transaction.
Currently, the Bitcoin blockchain uses something dubbed as the “Elliptic Curve Digital Signature Algorithm”. This creates a signature from the private key that controls a Bitcoin wallet. It thus ensures that only the rightful owner can spend the BTC. The Taproot upgrade will further add something dubbed as Schnorr Signatures.
This will help in making multi-signature transactions unreadable. This is particularly beneficial for large value transactions as it helps to reduce anonymity for individual Bitcoin addresses on the public blockchain. Besides, the Taproot upgrade also makes simple transactions indistinguishable from complex ones.
This ultimately helps in making better use of the finite space on the Bitcoin blockchain. Thus, it leads to improving the scalability of the Bitcoin blockchain.
Smart Contracts Arrive on Bitcoin Blockchain
This has been the much-awaited improvement to the Bitcoin blockchain. The self-executing smart contracts open up a flood of use-cases for the Bitcoin blockchain in addition to the financial ones.
The Taproot upgrade makes smart contracts cheaper and smaller in terms of space occupancy. Currently, the creation of smart contracts is possible on both – the Bitcoin blockchain and the Layer 2 Lightning Network. Smart Contracts implemented on the latter will typically lead to faster and cost-effective transactions.