A bitcoin upgrade, for the first time in four years, has been approved. Miners from all over the world have approved this. This moment of consensus between stakeholders is rare and is quite a huge deal for Bitcoin.
Taproot is the name of the upgrade. It will take effect this year from November. After the upgrade, more efficiency and transaction privacy will be available. This upgrade will also unlock the opportunity for smart contracts. This is an important feature of blockchain technology that completely reduces the function of middlemen even during complex transactions.
Taproot is important since it brings an opportunity for business people to expand the utility of Bitcoin. The last upgrade in bitcoin happened in 2017 which was called the last civil war, however, Taproot has universal support because this upgrade brings good improvements to bitcoin’s code.
Bitcoin’s upgrade is connected to digital signatures. These signatures are like fingerprints that a person leaves on transactions they conduct.
Currently, bitcoin uses Elliptic Curve Digital Signature Algorithm that is made through a private key that controls a wallet and it makes sure that the bitcoin is being spent only by the authentic owner. Taproot will change to Schnorr signatures that basically makes multi-signature transactions unreadable.
This means better privacy as your private keys will not be exposed as much on the block chain. You will be able to hide your identity even better after this upgrade.
This does not mean more anonymity for a particular bitcoin address. However, it will lead to simple transactions being indistinguishable from complex transactions that have multiple signatures.
These signatures are a game-changer when it comes to smart contracts. Smart contracts are self-executing deals that work on blockchain. They can be used for all kinds of transactions such as registering a vehicle, paying rent, etc.
Taproot will make smart contracts smaller and cheaper when it comes to the space used by them on the blockchain. It will make efficiency and functionality better and lead to amazing potential.
As of now, smart contracts can be made on the core protocol layer of bitcoin and on the Lightning Network which is built on Bitcoin and is a payments platform that has instant transactions. Any smart contract that is executed on this platform leads to cheaper and faster transactions.
Many developers have started building on this payments platform expecting the upgrade which will let them make specific contracts.
Why The Delay
The Bitcoin Miners have accepted the upgrade but it will be rolled out in November. Many tests will be conducted so that nothing goes wrong when the upgrade is open to all.
Upgrades can sometimes cause bugs to enter a system which could ruin a cryptocurrency system’s reputation. It could wipe out things like a self-inflicted injury.
Hence, the upgrade process is being properly tested, vetted, and retested again and again over a long period of time before it is officially deployed.
Many people remember the migration of 2013 where an upgrade went wrong which lead to bitcoin splitting in half, temporarily.