Reports have confirmed that the highly anticipated Bitcoin network upgrade “Taproot” has finally gone live on BTC mainnet.
Taproot upgrade was initially proposed by core developer Greg Maxwell back in 2018. Three years later, the network upgrade garnered unanimous approval from Bitcoin miners and other stakeholders in June this year. After several months of test and review, Taproot Upgrade went live on the BTC blockchain on November 14.
The highly anticipated network upgrade, which is the largest network upgrade in the history of Bitcoin, will now make the flagship crypto more private, secure and significantly reduce the cost of transactions.
While commenting about the new BTC network upgrade, Alyse Killeen, founder, and managing partner at Bitcoin VC firm Stillmark, stated:
“Taproot matters because it opens a breadth of opportunity for entrepreneurs interested in expanding bitcoin’s utility.”
Taproot Upgrade Explained
With many users and Bitcoin developers quite excited about the Taproot activation, the upgrade will also usher in a new dawn for Bitcoin as an ultimate digital asset.
Taproot intends to solve the long-existing privacy issues on the Bitcoin blockchain. In this case, the new upgrade will change the signature protocol that Bitcoin has utilized for many years. By design, signatures on the Bitcoin mainnet are like fingerprints left in every transaction.
For several years now, Bitcoin has been using the Elliptic Curve Digital Signature Algorithm, which creates the signature from a private key that controls crypto wallets. Under the new upgrade, Bitcoin will now use the Schnorr Signatures protocol that makes transactions more private and secure. Unfortunately, the network upgrade will attract minor effects on multi-signature transactions, which will be virtually unreadable. These effects will be a result of the activation of Bitcoin Improvement Proposal (BIP) 340.
Brandon Arvanaghi, a Bitcoin developer and founder of corporate cryptocurrency investment platform, applauded the privacy advancement, stating:
“You can kind of hide who you are a little bit better, which is good.”
However, it is worth noting that the Schnorr Signatures protocol will not make Bitcoin a private digital asset like Monero or make it impossible to trace your transactions.
Taproot upgrade will also make smart contracts more ubiquitous on Bitcoin. As it stands, smart contracts are only available on the Bitcoin core layer and the Lightning Network. In this case, very few people think of Bitcoin as a smart contract platform.
In a relatively short contest, Ethereum, the second-leading digital asset by market capitalization, is the dominant player in the smart contracts sector. Smart contracts drove Ethereum to record new all-time highs recently.
For several years, Ethereum has facilitated many decentralized applications (dApps) and decentralized finance (DeFi), which have made it the dominant force today. Moreover, smart contracts also made the functionality of non-fungible tokens (NFT).
Bitcoin Taproot upgrade will now make it easier to execute smart contracts on the BTC mainnet. The new upgrade will also make them cheaper and smaller.
Commenting on the smart contracts advancement, Fred Thiel, the CEO of Bitcoin miner Marathon Digital Holdings stated:
“The most important thing for Taproot is smart contracts. It’s already the primary driver of innovation on the Ethereum network. Smart contracts essentially give you the opportunity to really build applications and businesses on the blockchain.”
Bitcoin To Compete With Ethereum
Bitcoin Taproot upgrade poses fresh trade threats to Ethereum. The second-largest crypto is already facing heavy competition from other notable projects, including Polkadot, Solana, BSC, Cordano, Avalanche, Terra, and TRON that have already seen billions of dollars in total value locked (TVL) on their DeFi projects.
Nonetheless, with BTC now joining the list, the new competition would completely become a new dragon to slay for the Vitalik Buterin-founded project. Indeed, Bitcoin is a recognized project and super brand by its self. In this case, BTC will have an easy time outperforming Ethereum.
Bitcoin’s smart contracts advancement started around the mid-this year. In July, Jack Dorsey, Twitter founder and great Bitcoin proponent, hinted that his associate company Square would launch a new business
“with the sole goal of making it easy to create non-custodial, permissionless, and decentralized financial services. Our primary focus is Bitcoin.”
Rumors have spread that this business is about to launch in the new network upgrade.
Apart from the collectible merit Taproot will bring, the new network upgrade is also symbolic of the nature of Bitcoin. The flagship crypto received a similar network development four years ago. Unfortunately, the network did not go too well. At the time, the Segregated Witness upgrade left civil war and infighting within the Bitcoin community, an event that led to some operators forking away to form their Bitcoin iterations.
But this time around, Arrington Capital’s Ninos Mansor said:
“The upgrade could be a macro turning point for evolvability and innovation, merging the best of post-Segwit conservatism with the energy of new beginnings. It is a meta-upgrade, a chance to redefine what it means to contribute to bitcoin, whether one is a miner, developer, or full node.”