Taproot? The Privacy-Focused Bitcoin Upgrade Is Almost Here.
The first Bitcoin upgrade in four years, Taproot is one of the most anticipated technological upgrades of the popular cryptocurrency that promises to improve transaction privacy, scalability, and most importantly - unlock the potential for smart contracts.
06 August 2021
It has been a while since Bitcoin received a technological makeover, however, as Sigalos MacKenzie reported in her CNBC article, that is about to change come November. Taproot, the upgrade that aims to change and improve the way Bitcoin’s scripts operate, has been approved in a “rare moment of consensus among stakeholders,” says MacKenzie.
What is Taproot?
The new upgrade targets primarily digital signatures, it will focus on improving privacy and other factors related to complex transactions.
Right now, anyone can detect cryptocurrency transactions which use complex functionalities, like multi-signature requirements for example, which has been a cause of concern for Bitcoin privacy advocates.
Taproot is going to change that by switching to Schnorr signatures, “which essentially makes multi-signature transactions unreadable,” quotes McKenzie. With this new upgrade, all parties in a transaction can cooperate to make complex transactions look like standard, person-to-person transactions.
“It won’t translate to greater anonymity for your individual bitcoin address on the public blockchain, but it will make simple transactions indistinguishable from those that are more complex and comprised of multiple signatures,” says MacKenzie.
What does that mean for the feature of blockchain?
Simply put, a great deal! With the privacy concern addressed, Taproot just might be a real game-changer for the smart contracts, a self-executing transaction protocols stored on blockchain that can be used for a wide variety of purposes.
“Taproot makes smart contracts cheaper and smaller, in terms of the space they take up on the blockchain,” reports MacKenzie. With upcoming changes, which aim to enhance their functionality and efficiency, those contracts have a great potential for future development.
MacKenzie presents a perfect quote from Fred Thiel, CEO of cryptocurrency mining specialist Marathon Digital Holdings, that summarizes the whole event:
“The most important thing for Taproot is…smart contracts. 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.”
Read more: Bitcoin just got its first makeover in four years by MacKenzie Sigalos