Bitcoin, the world’s most popular digital currency, is due for its first upgrade in over four years, and miners across the globe have given it the thumbs up.
The new “Taproot” upgrade is due to take effect in November this year and will see the currency providing a new level of transactional privacy and efficiency to users, according to industry experts.
There’s been a lot of good news lately when it comes to bitcoin. The Salvadoran president had announced the country’s plans for adopting bitcoin as a legal tender just last week, and Elon Musk met with top North American bitcoin miners in May to establish a council that aims to reduce the environmental impact of bitcoin mining – a product of his erratic tweeting habits.
But the news of this new upgrade could not come at a better time, as China’s battle with cryptos and the mining of these currencies, as well as global crackdowns and regulations, continue to harm the public’s overall perception of cryptocurrencies.
Bitcoin’s last upgrade was in 2017, which was called “the last civil war” due to the divide in supporters for the upgrade. But the “Taproot” upgrade was met with great enthusiasm among bitcoin miners across the world as the changes are incremental improvements to the code.
The upgrade will not only see users experiencing improved privacy and efficiency when it comes to transacting with bitcoin, but it will also unlock the potential for smart contracts – which is a key feature of its blockchain technology.
Smart contracts are self-executing agreements that live on the blockchain and can be used for virtually any kind of transaction. The new upgrade will make smart contracts both cheaper and smaller in regards to the space they occupy on the blockchain.
Smart contracts can be created on bitcoin’s core protocol layer, as well as the payment platform built on the bitcoin blockchain, called the Lightning Network which allows for instant transactions. Smart contracts built on the Lightning Network generally lead to faster and less costly transactions.
“Lightning transactions can be fractions of a penny…while a bitcoin transaction at the core protocol layer can be much more expensive than that,” explains Alyse Killeen, founder of the bitcoin-focused Stillmark venture.
“Taproot matters, because it opens a breadth of opportunity for entrepreneurs interested in expanding bitcoin’s utility,” said Killeen.
It may take some time for Taproot to come into effect, even though the bitcoin community is backing the upgrade, it will most probably only be ready for implementation sometime in November as vigorous testing beforehand could ensure that the upgrade runs smoothly.
“Upgrades allow the – extremely remote – possibility of a bug entering the system, which would destroy confidence in the whole cryptocurrency system, effectively wiping it out – a ‘self-inflicted wound’ if you like,” said analyst at Quantum Economics, Jason Deane.
And we certainly don’t want to see 2013 happening all over again, where a faulty upgrade resulted in bitcoin being temporarily split in half.
The Taproot upgrade is an exciting development for the crypto community, and we can expect great things in the near future when it comes to bitcoin and all its amazing benefits.