On November 14, Bitcoin got a crucial upgrade known as the taproot update, which was the first in four years. Since the news of the taproot update began floating on the internet a few months ago, there has been a lot of anticipation. Approximately 10:45 a.m. local time in India, the update was successfully applied on the blockchain and made live. For bitcoin holders, it was a time of celebration and hope, since the new version would significantly improve the Bitcoin infrastructure in a variety of ways.

What features will the Taproot upgrade offer to Bitcoin investors is yet to be determined.

The Taproot upgrade is focused on improving the privacy and efficiency of transactions, and most crucially, it will unlock the power of smart contracts, which will eliminate the need for intermediaries in transactional transactions to take place.

It was vital, according to Alyse Killeen, an entrepreneur and founder of a venture capital business called Stillmark, to implement the taproot upgrade since it opens up a variety of opportunities for cryptocurrency aficionados who wish to optimise the usefulness of Bitcoin.

The most recent Bitcoin version, dubbed the “final civil war,” was very contentious because to the many bugs it included. In contrast to the 2017 upgrade, taproot has gotten a positive reception from bitcoin investors and fans throughout the world. One of the key reasons for this international agreement is the better and more durable script in terms of privacy and security.

What Changes Can Be Expected in Bitcoin Following the Taproot Update?

The taproot upgrade will improve the functionality of digital signatures, which are digital copies of a person’s fingerprint left behind when purchasing or selling bitcoins.

The current functioning of cryptocurrency makes use of an algorithm known as the ‘Elliptic Curve Digital Signature Algorithm’ to generate signatures from the private key that manages the bitcoin wallet, while also ensuring that only the actual holder of the private key can conduct Bitcoin transactions.

When the new Taproot technology is implemented, it will be layered with Schnorr signatures, which will render multi-signature transactions illegible. The privacy of your bitcoin address on the public blockchain will not be enhanced as a result of this. The addition of Schnorr Signatures, on the other hand, will make simple transactions indistinguishable from intricate and multi-signature transactions in the future.

As a practical matter, Schnorr Signatures will enhance privacy by preventing your private keys from being exposed on the blockchain. As a result, Brandon Arvanaghi said, it allows us to efficiently conceal our identities. The creator of Meow, a company that makes it easier for corporations to participate in the global cryptocurrency marketplaces, is an expert in Bitcoin mining engineering.

Smart Contracts Souped-up signatures have had a big impact on the development of smart contracts, which are self-executing agreements that remain on the blockchain.
From paying your housing rent on a monthly basis to paying recurring subscriptions, smart contracts allow you to essentially conduct any kind of transaction with ease. Smart contracts are now affordable and small in terms of the amount of space they take up on the blockchain, thanks to Taproot. As of right now, smart contracts may be implemented on Bitcoin’s fundamental protocol layer or on the Lightning Network, a Bitcoin-based payment network that allows for instantaneous transaction confirmation.

In Killeen’s words, “Lightning transactions can cost less than one-tenth of a penny‚Ķ but bitcoin transactions at the basic protocol level may be significantly more expensive than that.” As a result of the taproot upgrade, the developers had already started to depend on Lightning in order to keep up with the latest developments.

“The most notable feature of the taproot upgrade is smart contracts. It is already guiding the innovation on the Ethereum network in a positive direction. According to Fred Thiel, CEO of Marathon Digital Holdings, “Smart contracts allow developers to build apps and enterprises on the blockchain network.”

Defi, or decentralised finance, is a word used to describe financial applications that are aimed to displace intermediaries. As more developers create smart contracts on the bitcoin blockchain, bitcoin has the potential to become a key participant in the realm of Defi, or decentralised finance.

Reasons Why It Took Four Years For The Taproot To Go Live

In June, the bitcoin investors and fans came to an agreement on the latest version of the software. The taproot upgrade, on the other hand, did not go live until November. The extended testing period of a few months provided enough opportunity for error-free testing and eliminated the danger of anything going wrong during the upgrade.

“The upgrades provide a small window of opportunity for a bug to infiltrate the system when the system is being updated, which has the potential to shock the whole cryptocurrency system, perhaps destroying everything.” As a result, the technique for upgrading is tested over and over again. The most recent Bitcoin upgrade, which was applied in 2013, went horribly wrong, resulting in the halving of the bitcoin value.

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