Key Takeaways:
- Taproot upgrade, due sometime this weekend, brings more privacy and better smart contracts
- Bitcoin could experience increased volatility entering the weekend due to the upgrade
The Taproot Upgrade Comes to Bitcoin
Bitcoin, the world’s biggest cryptocurrency, is set to get a major upgrade for the first time in four years. The new upgrade, called Taproot, promises several important features to improve the Bitcoin network.
In more detail, Bitcoin’s Taproot upgrade should be released at some point this weekend. According to the Taproot Watch website, the activation is in two days.
On this note, you can expect increased volatility over the next hours until the new changes are introduced. With that in mind, the Taproot upgrade brings a couple of milestone changes to Bitcoin’s code.
Major Improvements to Bitcoin’s Code
To start, functional smart contracts. The Bitcoin network currently has smart contracts but they are largely avoided on the platform. In practice, they increase the transaction fees and add more size to the data on the Bitcoin network.
So, the Taproot upgrade eliminates this problem by introducing the so-called Schnorr Signature Algorithm (named after cryptographer Claus Schnorr). Furthermore, the upgrade is expected to reduce transaction fees on the network. To this end, a complex-sounding and technical concept comes into play: a system called Merklized Alternative Script Trees (MAST).
Presently, a transaction can cost as much as $100 while the Bitcoin network can handle about five per second.
Moreover, Taproot will enable better privacy on the Bitcoin network. With the growing adoption of bitcoin worldwide, the need for privacy has increased.
A Soft Fork to Show Consensus in the Community
In conclusion, the Taproot upgrade is expected to significantly enhance the Bitcoin experience. It highlights the continuous progress of cryptocurrency and blockchain technology. It also shows how the whole mining community was able to reach a consensus. On this note, over 90% of the network’s miners accepted the change as a soft fork, or change of cryptocurrency code. It’s called soft because the changes remain in the existing blockchain. A hard fork, in contrast, creates a separate blockchain.
While the upgrade is due to take effect, Bitcoin has been shattering records. More precisely, the token peaked at $69,000 on Wednesday, a fresh all-time high for the original coin. The strong rise lifted the digital asset’s value above $1.3 trillion.