Cryptocurrency in Focus: Bitcoin (BTC)
The original Bitcoin has been updated. What does this mean to the community? Here is everything you need to know.
Bitcoin’s latest update is called Taproot, and it’s the most significant change in the past four years. This update has been widely anticipated as an essential next step in solving the primary concerns in Bitcoin’s ecosystem.
Taproot’s key benefits include:
- Streamlining the processing of transactions
- Increasing overall efficiency by processing more transactions per block Reducing transaction costs
- And introducing enhanced privacy
Taproot’s fundamental value proposition is scalability by improving Bitcoin’s transaction efficiency. To understand the significance of Taproot, we need to know how it changes Bitcoin’s verification functionality and, in particular, the processing of complex transactions.
Basically, Bitcoin’s transactions require public and private keys to be verified to complete a transaction. Bitcoin uses Elliptic Curve Digital Signature Algorithm to generate keys and verify transactions. The Taproot upgrade introduces Schnorr signatures, which are more secure and straightforward to implement. One characteristic of Schnorr signatures is “linearity”, which means that you use a sum of public keys to sign a sum of signatures.
Consequently, multiple Bitcoin transactions can be verified quickly in batches instead of being evaluated as a single transaction. Before Taproot’s implementation, verification of transactions on Bitcoin’s network was slow as each digital signature was individually and publicly validated. Examples of complex transactions include “timelock releases” and “multi-signature verification”; without Taproot, these functions would require the creation of multiple transactions, making it easy to detect and identify them.
The Taproot upgrade will make it possible to “cloak” all the moving parts of a Bitcoin transaction so they will look like a single transaction. Furthermore, It also scrambles transactions with single and multiple signatures, making it more challenging to identify transaction inputs on Bitcoin’s blockchain. Consequently, Taproot is a vital step forward for Bitcoin privacy.
Furthermore, Taproot makes it possible to execute a covert Bitcoin script. Thus, spending Bitcoin using Taproot could be a transaction on the Lightning Network, a peer-to-peer trade, or a sophisticated smart contract, and all activity becomes indistinguishable.
This important upgrade opens the door to more innovative financial applications on Bitcoin’s network. Many expect that the Taproot upgrade will allow Bitcoin to become a Decentralized Finance (DeFi) player and completely eliminate the need for intermediaries from transactions.
Regarding price, bitcoin’s worth as a store of value has been tied to its utility. Understandably, Bitcoin’s price will increase as the number of useful transactions on its network increases. This makes Taproot’s update critical in bringing longevity and relevance to Bitcoin by shortening transaction sizes and increasing their speed on the network.
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Bitcoin Market Snapshot
November 23, 2021 : BTC is $58,290 USD with a 24-hour trading volume of $34,378,052,112 USD. BTC is down 0.55% in the last 24 hours. The current CoinMarketCap ranking is #1, with a live market cap of $1,106,265,521,958 USD. It has a circulating supply of18,880,275 BTC coins and a total. supply of 21,000,000 BTC coins.