- What is the Taproot Update?
- What changes are being made to the Bitcoin Network
- The benefits of the Taproot to Bitcoin and its users
Taproot: Four Key Benefits for Users
The crypto world is innovative, constantly evolving, and never standing still. So what is Taproot, Bitcoin’s latest upgrade? And what does it mean for you?
When we talk about blockchain technology, we’re not talking about a finished article. It is a constantly-evolving ecosystem in which developers are fine-tuning and experimenting to produce better, more user-friendly experiences. And the Bitcoin network, home to the biggest cryptocurrency, is no exception. Indeed, with thousands of rivals challenging its dominance, Bitcoin has to continuously up its game if it wants to remain on top.
What Is Taproot?
The newest upgrade to the Bitcoin protocol, Taproot, is a very significant step forward for the network. Broadly speaking, the upgrade itself is a triumph of decentralized development. This is because the Bitcoin blockchain, as an open-source network, demands consensus between users if any upgrades are to be adopted. In May 2021, a two-week voting period named ‘Speedy Trial’ was rolled out across the network, whereby miners could ‘vote’ for their approval of Taproot by including a signal in their block. Within this period, the threshold level of 90% of supportive blocks was reached, indicating virtually unanimous support for the upgrade. The full software upgrade was then completed by November.
As we shall see, the details of Taproot are extremely complex, but as a concept, it demonstrates the success of democratic innovation that is key to DeFi.
What Has Changed?
Taproot addresses some of the most prevalent issues in Decentralized Finance (or DeFi), namely privacy, efficiency, and scalability. But more importantly, these are problems that have plagued the Bitcoin network for some time and afforded its rivals the opportunity to attract support.
At its core, Taproot changes the way in which transactions are recorded. Previously, the algorithm that processed transactions provided encryption but still revealed whether they were monosig (single-signature, less secure) or multisig (multiple signatures, more secure). Obviously, users would prefer this information to remain private for the risk of drawing attention and compromising security.
To replace this, Taproot offers a new algorithmic protocol named Schorr signatures. Thanks to Schorr signatures, multisig transactions are condensed and made indistinguishable from monosigs, improving privacy and anonymity. In addition, because transactions are batched together, they are made faster and more efficient. As a result, this frees up space on the Bitcoin network and enhances its overall operational capacity.
This is a crucial development because multisig transactions encompass a range of complex blockchain operations. In other words, Taproot revolutionizes the network’s ability to cope with smart contracts, DApps (Decentralized Apps), and even NFTs. So Bitcoin no longer has to sit on the sidelines while rivals (especially Ethereum) forge ahead in these areas!
The technical details are all very interesting, but the key question is: what does this mean for you and your Bitcoin?
As already explained, the encryption of transactions is more secure with Schorr signatures. Generally speaking, Taproot makes it more difficult for your transaction to be differentiated from others, thus safeguarding your anonymity.
Improved Transaction Speeds
Taproot essentially ‘tidies up’ the network by handling multiple transactions simultaneously. Bitcoin has been criticized for its poor efficiency and slowness compared to other networks, so this is an important improvement.
Lower Transaction Fees
Since transactions are handled more effectively and take less space on the network, fees will be reduced for you, the user!
Smart Contract Capabilities
Technically, the Bitcoin network has been capable of hosting smart contracts for some time. However, problems with scalability and congestion have prevented it from being fully utilized in this respect. In this light, Taproot allows Bitcoin to close the gap with its rivals as a network for more complex operations and basically make it more useful.
But Why Does This Matter to You?
Any improvement to Bitcoin’s capabilities makes it a better market prospect. The better the blockchain, the more likely big, institutional players are to adopt it and increase market demand. Although we cannot be certain that Taproot will cause BTC price to skyrocket overnight, it massively improves prospects for adoption and growth going forward!
Start enjoying the benefits of Taproot for yourself – buy BTC today with zero fees!