- This is one of the major upgrade in the Bitcoin Code that has been approved by over 90% of the miners around the globe in four years.
- This upgrade knows as Taproot will allow for a better transaction efficiency and privacy for all users & most importantly it will unlock the feature of deploying Smart Contracts on the Bitcoin Network itself.
If you can understand hindi, you should have a quick watch on our recent video,
Bitcoin Taproot upgrades are one of those moments when people think that this is another revolutionary news for the Bitcoin Community. Actually, it’s a pretty big deal for all the Bitcoin holders & network participants as this would allow users & developers to do certain tasks over the Bitcoin network which weren’t possible yet.
We’ll try to help you understand the key changes after this network upgrade & whether you should be concerned at all or not.
The upgrade itself is called Taproot and will go live expectedly in November. When it goes live, it would simply mean greater transaction privacy and efficiency, and crucially among everything else, it will unlock the capacity of deploying Smart Contracts over the Bitcoin network. Smart Contracts are one of the key features of decentralized finance space (Defi) & Bitcoin already being one of the most adopted cryptocurrencies to date will definitely get a lead in further adoption.
Not only do Smart Contracts help in eliminating the middle-man from even complex transactions it also opens a broader opportunity for bitcoin & the developers who are interested in expanding bitcoin’s utilities.
Unlike the 2017 upgrade of the network, 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 are fairly incremental improvements to the code.
What is going to be changed?
Bitcoin’s makeover has a lot to do with digital signatures for transactions, which you can essentially think of as a unique identifier that every individual leaves on every single transaction which they make on the network.
As of today, the algorithm which is used to verify each transaction is called the “Elliptic Curve Digital Signature Algorithm,” or in simple words, the transaction is approved using the private key of the wallet from where the bitcoin is being spent. This ensures that the rightful owner is spending the bitcoin and can only be approved using the private key of the wallet holder.
After the Taproot upgrade, this algorithm will switch to something over known as Schnorr Signatures, which makes multi-signature transactions unreadable. In simple words, it means having greater privacy and exposure on the chain because your keys won’t have much exposure on the chain. Wait for a second, that doesn’t mean you’ll be totally anonymous over the network, it’s just a little tweak to improve how things will work on the network.
This new algorithm will make simple transactions indistinguishable from the ones which require multi signatures and are more complex on the chain. They are also a game-changer for Smart contracts, which are self-executing pieces of code that stay live on the blockchain. You can use Smart Contracts for essentially anything from paying your college fees to paying your rent or registering your house/vehicle etc.
Wait a minute before we proceed further.
Wait, let me elaborate lightning network first before we proceed further. In simple words, Lightning Network layer was added to bitcoin network to process off-chain transactions between parties which essentially costed pennies or even free transaction fees between one wallet to the other. It has been a game changer so far considering the evolution of bitcoin continuously as a payment method across countries. It was designed to speed up the transaction processing times and decrease the associated costs of the Bitcoin blockchain.
After all of these, I would still emphasize the feature of enabling Smart Contracts over the Bitcoin Network. Smart Contracts are the core innovation driver in the blockchain space. If we look at ethereum, it’s famous because of the cool utilities which developers have figured out on its blockchain with time thanks to Smart Contracts. Imagine the scale of such innovation with the Bitcoin Network.
I believe it to be a complete game-changer for the entire space as more and more programmers start to build on the top of the bitcoin network, it will surely have a chance to become a top player in the world of Defi or decentralized finance as I mentioned above.
Why wait till November & not do it now!
Although the bitcoin community has agreed to push the upgrade, the rollout itself probably won’t happen until November, that’s because a lot of testing ahead of time has to be done to reduce the chances of something going wrong during the upgrade.
Nobody would want to have different clients or miners in the protocol to be out of sync. That might lead to a catastrophic incident which nobody wants probably.
I think more or less you’ve understood all about this upcoming Bitcoin Network upgrade called the Taproot. Do let me know if you have any doubts or suggestions using the form here.