Bitcoin Just Received Its First Upgrade In Four Years
https://www.nasdaq.com/articles/bitcoin-just-received-its-first-upgrade-in-four-years-2021-06-15
he first bitcoin (BTC) upgrade in four years has just been approved by bitcoin miners and it’s called Taproot. Although it won’t take effect until November, it has supported the world’s most valuable cryptocurrency to breach $40,000 for the first time in two weeks. The long-awaited upgrade will change the current privacy signature “Elliptic Curve Digital Signature Algorithm,” used for protecting the ownership and privacy.
With Taproot, the coin holder will move to Schnorr signatures, which essentially makes multi-signature transactions unreadable. Schnorr signatures were invented by the German mathematician Claus Schnorr in the 1970s. Taproot will combine the public keys of the users participating in a smart contract and create a new public key. That key can then create a unique signature which is only possible for that specific combination of addresses.
Besides that, the upgrade has multiple advantages but two of them are crucial for bitcoin’s future fundamentals and competitive position. These two factors include greater transaction privacy, and unlocking the potential for smart contracts. The last time the bitcoin protocol was upgraded was in 2017 and that was referred to as segregated witness (SegWit). The latest upgrade event is different from the 2017 amid near universal support.
"Taproot adds important new functionality to the bitcoin protocol. But perhaps more important is that its adoption was nearly unanimous. In the wake of the block size war of 2017, the smooth taproot upgrade is a demonstration of strong consensus about the direction of base layer protocol development," says Cory Klippsten, the chief executive of bitcoin-buying app Swan Bitcoin, speaking via Telegram.
Furthermore, the market analysts have applauded the upgrade, citing it as a major opportunity for bitcoin’s utility expansion.
"Taproot is a very important upgrade that allows new levels of development hitherto impossible on bitcoin's blockchain and further cements bitcoin's position as the most relevant of all cryptocurrencies," says Quantum Economics' bitcoin analyst Jason Deane, speaking via Telegram. "In our view, the potential impact is probably not yet fully understood by the wider community, but this is likely to become clearer over time."
The Taproot Upgrade Means Greater Privacy and Efficiency
The upgrade and new signature means greater privacy. This is because the keys won’t have significant exposure on the chain when compared to the previous one. This doesn't mean you are going to enjoy greater anonymity. However, it will help in making transactions indistinguishable from complex and multiple signature transactions.
“You can kind of hide who you are a little bit better, which is good,” said Brandon Arvanaghi, previously a security engineer at crypto exchange Gemini.
A Game Changer for Smart Contracts and DeFi Demand
Smart contracts, the most important feature of blockchain, will become smaller and cheaper following the upgrade. Smart contracts are generally deemed as self-executing agreements living on blockchain.
In the Bitcoin network today, smart contracts require an incredible amount of space to be stored on the blockchain. Because transaction fees are a function of the amount of space a transaction wants to occupy in a block, creating smart contracts on Bitcoin is very expensive.
At present, smart contracts that run on Ethereum blockchain - the second most valuable cryptocurrency, are most loved by developers for building other applications and products. The stunning rise in Ethereum price is also attributed to increasing demand for its blockchain technology. Ethereum network is also mostly used in building DeFi applications, thanks to its smart contracts that helps in automatically executing transactions without intervention of any third party.
“The most important thing for Taproot is...smart contracts,” said Fred Thiel, CEO of cryptocurrency mining specialist Marathon Digital Holdings. “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.”
Following the upgrade in November, there is potential that developers will start using bitcoin’s blockchain and smart contracts for applications supported by DeFi technology.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
...ergo jetzt bruzelt halt die cpu vor sich hin, anstatt der gpu. 
aus.
