After a four year wait, on Sunday, November 14th, Taproot was activated at block 709,632, signaling the start of a new era for Bitcoin. Taproot operates on a digital signature scheme from the original Bitcoin’s blockchain.
While only 55% of all Bitcoin nodes are currently running Taproot, the upgrade brings significant changes to the network. Here’s what to expect from the new upgrade.
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Privacy
One primary aim of the Taproot upgrade is to improve the privacy of certain transactions. Schnorr signatures will ultimately display multi-signature transactions as a standard, single transaction.
This means that multi-signature transactions will be indistinguishable from simple transactions, allowing for greater anonymity and privacy.
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Scalability
One major issue Taproot addresses is the scalability of Bitcoin’s network. Because Schnorr signatures compress multi-signature transactions down into one, the amount of data stored on the blockchain will be greatly reduced. This reduction in data will in turn provide the necessary room required to improve Bitcoin’s scalability.
Cheaper Transactions
Thanks to Schnorr signatures, Bitcoin users can expect cheaper transaction fees. This is because the network’s new signature uses less data when processing multi-signature transactions, with the direct impact that transaction fees will be less costly.
On The Flipside
- The price of Bitcoin has barely reacted to the Taproot upgrade, having consolidated between $64k and $66k.
Smart Contracts
Taproot will improve the performance of the Bitcoin network and open up the potential for smart contracts to be integrated on the network. The new Schnorr signatures will let users execute more complex smart contracts than Bitcoin could previously process.
Why You Should Care?
Taproot will improve more than just the performance of Bitcoin’s network. Just like Ethereum and other networks that operate smart contracts, the Bitcoin network will increase its potential application and use cases.
