14 Nov, 2021 | BANKSY
A bitcoin upgrade has been launched. This was a major update in the past 4 years showing an unique moment of consensus between stakeholders which will effect the most famous and leader in cryptocurrency. The update was named as Taproot which means “greater transaction privacy and efficiency”. This update will open more doors for smart contracts, which can be used to remove third parties from transactions.
“Taproot matters, because it opens a breadth of opportunity for entrepreneurs interested in expanding bitcoin’s utility,” said Alyse Killeen, founder and managing partner of bitcoin-focused venture firm Stillmark.
Unlike bitcoin’s 2017 upgrade – referred to as the “last civil war” because of the contentious ideological divide separating adherents – Taproot has near universal support, in part because these changes involve fairly incremental improvements to the code. Currently Bitcoin uses the “Elliptic Curve Digital Signature Algorithm,” which creates a signature from the private key that controls a bitcoin wallet, and ensures that bitcoin can only be spent by the rightful owner. Taproot will add something known as Schnorr signatures, which essentially makes multi-signature transactions unreadable. Basically it will add more privacy, because keys won’t have as much exposure on the chain. “You can kind of hide who you are a little bit better, which is good,” said bitcoin mining engineer Brandon Arvanaghi, who now runs Meow, a company that enables corporate treasury participation in crypto markets.
Also Taproot makes smart contracts more cost effective and smaller, in terms of the space they take up on the blockchain. Killeen says that this enhanced functionality and efficiency presents “mind blowing potential.” “The most important thing for Taproot is...smart contracts,” said Fred Thiel, CEO of cryptocurrency mining specialist Marathon Digital Holdings. “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.”