Taproot will boost the privacy, security, and scalability of the Bitcoin network.
The long-awaited Taproot upgrade of the Bitcoin network is expected to arrive this weekend.
The soft fork will be activated at block 709,632, marking a significant change in the network.
Taproot is a collection of different changes which will be deployed at once with the upgrade.
Its lynchpin is the “Schnorr Signatures” cryptographic algorithm. It will improve the privacy, security, and scalability of the blockchain.
Bitcoin network currently uses the Elliptic Curve Digital Signature Algorithm (ECDSA) for transactions, wherein a user has to approve a transaction with a digital signature (derived from the private key).
The new upgrade brings a different technique called Schnorr Signatures, which will replace the ECDSA.
It is easier and faster to execute than ECDSA; moreover, it offers “linearity”.
Linearity provides anonymity, especially to Multi-signature transactions and also make them cheaper through signature aggregation.
Through the Schnorr Signature technique, multiple signatures can be combined into a single signature. So, a Multi-signature Transaction will appear as a Single Signature transaction by using Schnorr Signatures.
The aggregation results in a single signature with the same length as a regular One-person Signature. It leads to significant space savings and also boosts the scalability of the network.
Furthermore, it makes it difficult to determine who did or did not sign a transaction, resulting in anonymity.
Consequently, in schemes where all participants must sign to spend funds, a person would not be able to distinguish between Single-party Transactions and Multi-signature ones.
The Taproot upgrade will also enable complex contracts, which are not likely to be as flexible as Ethereum smart contracts. But they surely will add more functionality to the network.
Do you think this will lead to faster Bitcoin adoption and push its price up? Comment below.
At the time of writing, bitcoin was trading at $64250 on Binance.
For an in-depth understanding, you can watch this detailed video.
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