Bitcoin is the largest and the most valuable Cryptocurrency. In 2021, it has been in a bullish rally, surprising so many market analysts. In the last quarter of 2021, Bitcoin introduced the taproot upgrade.
A Bitcoin taproot is an upgrade containing three major Bitcoin Improvement Proposals( BIPs). These BIPs include the tapscript, taproot, and Schnorr signatures.
This upgrade aims to bring an enormous improvement in the Bitcoin blockchain and infrastructure. It will increase efficiency, privacy and reduce the transaction cost of transactions in the blockchain. Also, taproot will solve the scalability and environmental issues that Bitcoin has had for years. Since miners worldwide have accepted the taproot update, we expect other cryptocurrencies to adopt this advancement.
Why Is Bitcoin Adopting the Taproot
It is Cheaper and uses less space
Most Taproot outputs use less space on the blockchain than the conventional outputs. This is because taproot output locks the bitcoin and the public key directly, compared to the outputs that lock the bitcoin to the public key’s hash. Taproot makes sending bitcoins expensive because public keys are bigger than public key hashes. However, it makes it cheaper because it adds the public key in the scriptPubKey and not in the Script Witness.
Improved Privacy
Bitcoin Taproot will use Key aggregation and Schnorr signatures to ensure that multi-signature contracts are similar to single signature contracts. Also, it locks bitcoin to many scripts making all transactions secure.
Taproot Activation Involves The Bitcoin Community
Taproot developers have not integrated it into the Bitcoin infrastructure. This is because the Bitcoin community is supposed to discuss, review, test, merge and decide how and when it will be adopted. Taproot will not only be an upgrade developed by Bitcoin but selected and executed by the community.
Taproot Might Increase BTC Mass Adoption
Currently, Bitcoin is the most invested Cryptocurrency. Taproot will increase the adoption of BTC. We expect the upgrade to improve the transactions per block, reduce the transaction time, and increase speed. The upgrade will also lower the transactional fees opening the crypto for more widespread market uses.
Taproot is a Good News to Bitcoin Miners
The taproot will make mining pools signaling very easy for BTC miners because it will not require updating the node software. All the mining pools will have to support the taproot before launch. The taproot will therefore ensure high signaling percentages. Also, because it’s faster and more efficient in space consumption, mining will be more efficient. To add the Taproot signal support, add “4” at the end of the version bit of our mining block i.e 0x2f900004)
Will Taproot Make Tesla take Bitcoin Payments?
Early this year Tesla stopped taking Bitcoin payments stating that the mining process wasn’t environmentally sustainable. Elon Musk, the CEO stated that when Bitcoin’s mining becomes more sustainable, the company might reconsider Bitcoin payments. Will Taproot make BTC mining more sustainable? We know that the upgrade is supposed to make the mining process more efficient, but we will have to wait till the adoption to see if it is energy efficient.