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| Bitcoin upgrade improves privacy and security |
The cryptocurrency Bitcoin received its first upgrade in four years. This upgrade represents a rare moment of consensus among the participants and is a huge deal for the world's most popular cryptocurrency.
When the coin's blockchain reaches block 709632, the upgrade begins, which is pulled by F2Pool and restarted.
This marked the start of the network's first major upgrade since Segregated Witness launched in 2017.
The Taproot update means more privacy and efficiency in transactions, and most importantly, activation of the smart contract functionality, with which intermediaries can be removed from transactions.
The Taproot update is important because it provides a variety of options for entrepreneurs interested in expanding the uses of Bitcoin.
Unlike the 2017 upgrade, Taproot offers almost universal support. This is partly because these changes include some somewhat incremental improvements to the code.
A big part of bitcoin's transformation has to do with digital signatures, which are like the fingerprints people leave with every transaction. The previously updated cryptocurrency uses an elliptic curve digital signature algorithm.
The algorithm generates a signature from the private key that controls the Bitcoin wallet. It ensures that the coin can only be used by its rightful owner.
The Taproot update adds so-called Schnorr signatures, which make transactions with multiple signatures unreadable.
This does not further anonymize your personal Bitcoin address on the entire public blockchain.
However, this does not distinguish simple transactions from more complex transactions consisting of several signatures. In fact, this means more privacy.
These supporting signatures have also changed the rules of the game for smart contracts, which are automatically executed for existing agreements across the blockchain. In theory, smart contracts can be used for almost any type of transaction, from paying a monthly rent to registering your car.
The first major change in the Bitcoin network since 2017
In terms of the space they occupy on the blockchain, Taproot makes smart contracts cheaper and cheaper. These enhanced functionality and efficiency offer great potential.
Currently, smart contracts can be created either through the underlying currency protocol layer or through the Lightning Network, a Bitcoin-based payment platform that can conduct instant transactions.
Smart contracts executed over the Lightning Network usually result in faster and cheaper transactions.
Smart contracts are one of the main benefits of updates to the root master. These smart contracts are the most important innovation driver in the entire Ethereum network.
Smart contracts give you the opportunity to build applications and companies on the blockchain. As more and more programmers build smart contracts on the Bitcoin blockchain, this currency could become more efficient in the field of DeFi or decentralized finance.
Ethereum dominates today because it is the preferred blockchain for these applications (also known as dApps).
Although the Bitcoin community agreed to install the upgrade in June. But the launch itself didn't take place until November. The two-month timeframe is intended to provide sufficient time for testing and reduce the possibility of errors during the upgrade process.
Upgrading can cause bugs to penetrate the system, potentially destroying trust in the entire cryptocurrency system. Therefore, upgrades must be carefully tested, retested, and verified over a long period of time.