The first Bitcoin update in four years has taken place. The Taproot update means greater transaction privacy and efficiency, and most importantly, it will unlock the potential of smart contracts that can be used to remove middlemen from transactions.
Bitcoin community welcomes Taproot
“Taproot is important because it offers ample opportunity for entrepreneurs interested in expanding the utility of Bitcoin,” said Alyse Killeen, founder and managing partner of Bitcoin-focused venture firm Stillmark. Taproot has near-universal support, in part because these changes include incremental improvements to the code. A large part of Bitcoin’s replenishment has to do with digital signatures, which are like the fingerprint a person leaves on every transaction. Currently, the cryptocurrency uses something called the “Elliptic Curve Digital Signature Algorithm,” which creates a signature from the private key controlling a Bitcoin wallet, ensuring that Bitcoin can only be spent by the rightful owner. According to Bitcoin miner Alejandro De La Torre, Taproot will add something known as Schnorr signatures, which makes multi-signature transactions unreadable.
This does not mean more anonymity for your individual Bitcoin address on the public Blockchain, but it does make simple transactions indistinguishable from more complex and multi-signature transactions. These empowered signatures are also a game changer for smart contracts, which are self-executing agreements that live on the Blockchain. Taproot makes smart contracts cheaper and smaller in terms of the footprint they occupy on the Blockchain. cryptocoin.com As we reported, although the Bitcoin community agreed to lock the upgrade in June, the rollout itself didn’t happen until November. The few months delay was designed to allow ample time for testing and to reduce the chance of something going wrong during the upgrade.
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