Bitcoin (BTC) Network All Set for the Taproot Update This November 2021
The Bitcoin network is all set to get one its most major and important makeovers in the last four years. With an unanimous vote coming from the miner community worldwide, the Bitcoin Taproot upgrade will come into activation this November.
The Taproot upgrade will bring higher translation privacy and efficiency to the Bitcoin network. More importantly, it will also unlock the network’s capability to host smart contracts. This will basically unlock massive opportunities for entrepreneurs that are keen on expanding the Bitcoin network utility.
Despite the Bitcoin community agreeing to this upgrade, there’s a purpose behind the delay of Taproot activation. Over the next months, a lot of testing will happen that reduces the probability of something going wrong during the upgrade launch.
All the upgrade processes will be carefully tested, retested, and vetted with several iterations before the full deployment.
Interestingly, the Bitcoin Taproot makeover has to do a lot with replacing the existing digital signatures framework. Currently, the Bitcoin network uses something called the “Elliptic Curve Digital Signature Algorithm”. This algorithm is created from a private key that controls a Bitcoin wallet while ensuring that only the right owner can spend the Bitcoin.
Bitcoin’s Taproot upgrade will switch to something better dubbed Schnorr signatures that will make multi-signature transactions unreadable. This, in practice means greater privacy since the keys won’t have much exposure to the chain.
This doesn’t mean it will bring greater anonymity for individual Bitcoin addresses on the public network, but rather it will make transactions indistinguishable from those that are very complex and comprised of multiple signatures.
This is also crucial for smart contract execution on the Bitcoin network. The smart contracts are basically self-executing agreements alive on the blockchain. The Bitcoin Taproot upgrade will make smart contracts cheaper while also occupying less space on the blockchain network. Taproot will bring enhanced functionality to Bitcoin smart contracts thereby offering massive potential to developers.
As of now, smart contracts can be created on both - Bitcoin’s core protocol layers as well as the Bitcoin Lightning Network. The Lightning network is a layer-2 payments platform built atop Bitcoin’s core blockchain and enables instant transactions. Smart contracts executed on Lightning will lead to even faster and less costly transactions.
With smart contracts coming to the Bitcoin network the blockchain will become a capable player in the world of decentralized finance or DeFi.