Bitcoin is a highly advanced technology that is still in its relative infancy. We have yet to realize its true potential, and experts predict it will be further adopted into mainstream business practices as the technology is better understood.
However, despite its sophistication, Bitcoin is not infallible. In 2021, the cryptocurrency underwent a major upgrade process known as Taproot. Let’s take a closer look at what Taproot was and what it meant and discuss whether or not we could see another Bitcoin upgrade in the future.
What was the Taproot Upgrade?
The Bitcoin Taproot upgrade went live in November 2021, a move widely agreed upon by investors and crypto enthusiasts in a moment of consensus that is rare in such a passionate and knowledgeable community.
The Taproot upgrade was designed to improve the speed and efficiency of Bitcoin transactions and the asset’s security capabilities. It did so by changing the way in which digital signatures are managed.
Before Taproot, Bitcoin transactions were validated through a system of digital signature verification, which are fingerprints left by users on individual transactions. Previously, Bitcoin used a system called the Elliptic Curve Digital Signature Algorithm (ECDSA) to validate these signatures, verifying them against a Bitcoin wallet’s private key.
However, with multi-signature wallets, the ECDSA system meant each signature had to be verified individually. This was a slow process that came with security concerns, as it increased user exposure. With Taproot, Bitcoin was able to implement a new system called Schnorr signatures, which allowed for multi-signature wallets to be validated as one, rather than individually.
This significantly improved efficiency as well as security, as now multi-signature transactions are indistinguishable from single-signature transactions. What’s more, the Taproot upgrade allows for certain details to be hidden, including currency amounts, addresses, and sources. In addition, the upgrade introduced zero-knowledge-proof capabilities, allowing users to verify actions without revealing personal details.
Smart Contracts
The Taproot upgrade also made it easier for smart contracts to be implemented on the Bitcoin blockchain.
Smart contracts are self-executing digital contracts that guarantee both parties uphold their end of the deal. They have a wide range of uses and are being increasingly adopted by a variety of different businesses and industries.
Smart contracts have always been possible on the Bitcoin blockchain, but managing them was laborious and cumbersome. The Taproot upgrade overhauled how smart contracts function on the platform, making them cheaper to operate and smaller, far more manageable and easier to use.
Why Did Bitcoin Upgrade?
Bitcoin was the first and is still currently the most popular cryptocurrency, but its technology is somewhat rudimentary when compared to some of the more recent altcoins on the market.
The Taproot upgrade was designed to bring Bitcoin in line with the competition and to ensure it remained a viable alternative payment system. You might ask, why has it taken so long? Surely this upgrade should have been implemented years ago.
However, a Bitcoin upgrade back in 2013 resulted in a temporary fork, splitting the blockchain network in two. Thankfully, the problem was quickly rectified, narrowly avoiding disaster. The memory of this event was likely the reason the Taproot upgrade took so long, users were wary of any change and concerned about possible negative side effects.
The Taproot upgrade underwent several rounds of testing and stringent reviews. This delayed the rollout of the upgrade but ensured it would be a success and would not cause any unexpected damage or disruption.
Will Bitcoin Upgrade Again?
The Taproot upgrade improved on some key areas that many experts maintained were holding Bitcoin back. However, the currency still lags behind the competition in certain aspects, particularly in its consensus mechanism.
Bitcoin uses a consensus mechanism known as proof of work. This is where users solve complex mathematical puzzles to validate new blocks and add them to the chain. This was a revolutionary concept at its inception, but requires an enormous amount of computational power, making it both inefficient and environmentally harmful.
Bitcoin’s closest rival Ethereum recently upgraded its consensus mechanism, now utilizing a system called proof of stake. In a proof of stake system, validators are chosen from a pool of users who have contributed or staked a significant amount of currency on the blockchain. These specially chosen validators can then verify new transactions and are then rewarded with crypto.
Proof of stake is a far more efficient consensus mechanism. Transactions can be verified faster, and users do not need to have advanced hardware to participate. What’s more, proof of stake is more environmentally friendly, a crucial factor when we consider the ongoing climate crisis.
If Bitcoin wants to keep up with Ethereum, it will have to consider undergoing another upgrade and overhauling its consensus mechanism. Not only will this make the network faster, but it will make it more environmentally sound, surely a crucial factor for any future payment system.
Conclusion
The Bitcoin Taproot upgrade was a long time coming and it addressed numerous issues that had long plagued the cryptocurrency. However, it wasn’t a fix-all solution, and Bitcoin is still behind competitor coins like Ethereum on a number of fronts. If Bitcoin wants to keep its place at the top of the crypto world, it may well have to roll out a future upgrade.
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Source: https://www.thecoinrepublic.com/2023/05/19/will-bitcoin-upgrade-again/