Competing cryptocurrency Ethereum has gained notoriety in recent years due to the fact that it is easier to create smart contracts using the blockchain. Ethereum will likely still be the smart contract cryptocurrency, but Bitcoin’s taproot upgrade will help bridge the gap between the two when it comes to smart contract creation.
The world’s oldest and most popular cryptocurrency gets an update for the first time in years, and a new Taproot code upgrade brings Bitcoin with improved security and privacy. Bitcoin’s taproot came into effect over the weekend when the cryptocurrency reached block 709,632, making it its first major upgrade since 2017. By introducing a new type of signature called Schnorr Signature, Taproot helps make Bitcoin transactions more private, efficient and cost-effective. But at the same time, this new upgrade makes it easier to run smart contracts on the blockchain using Bitcoin.
Scnorr signatures also reduce the amount of data required for multi-signature transactions, but are more complex than standard transactions. Not only does this make the transaction cheaper, it also makes the energy and time required to complete the transaction more efficient as there is less data involved. Now that Bitcoin has undergone a taproot upgrade, the cryptocurrency is likely to experience a new wave of innovation as it can be used as an alternative to Ethereum when assembling smart contracts
According to CNBC’s new report, Taproot’s upgrade is a collection of three separate Bitcoin upgrade proposals. The new upgrade not only facilitates smart contracts on Bitcoin’s blockchain, but also improves the privacy of certain transactions as Schnorr signatures enable multi-signature transactions. These transactions involving multiple addresses will now appear as a single standard transaction, providing greater anonymity and privacy to the parties involved.