The main client for interacting with the main cryptocurrency network called Bitcoin Core has received an update to version 22.0. One of the key features of the upgrade was the continued integration of the Taproot protocol, which should be activated in November 2021.
This event could significantly expand the scope of BTC, as it promises to expand the capabilities of smart contracts on Bitcoin in the foreseeable future. Let’s talk about what is happening in more detail.
Note that smart contracts are essentially programs that interact with the blockchain. They allow unfamiliar parties to conduct transactions with each other and be sure that when a certain action is performed, the response will also be performed.
Smart contracts have become the basis for the growing popularity of Ethereum, the network of which was originally created to interact with them. The most interesting thing is that the functionality of such applications is limited only by the imagination of the developers. That is why in the summer of 2020 the industry went through a stage of active development of the sphere of decentralized finance, and now it is going through the peak of the popularity of unique NFT tokens.
It is assumed that something similar can be done with the Bitcoin blockchain, albeit in a less convenient form. However, for now, BTC developers are actively working on the implementation of the so-called Taproot. In general, the update will improve the confidentiality and efficiency of transactions, as well as make it possible to work with smart contracts, which will now be cheaper and take up less space in the blockchain.
Earlier, the head of Marathon Digital Holdings, Fred Thiel, commented on the prospects for activating Taproot. Here’s a quote from CNBC.
The most important feature in Taproot is smart contracts. It is already the main catalyst for innovation on the Ethereum network. In fact, smart contracts provide the ability to build applications and entire enterprises based on the blockchain.
And soon work in this direction will begin.
Why is Taproot needed?
Bitcoin developer Gregory Maxwell first proposed the Taproot upgrade in 2018 as a way to integrate smart contracts into cryptocurrency while further increasing scalability and privacy. This is one of the most important BTC upgrades since the Segregated Witness or SegWit integration in August 2017.
One notable feature of Taproot is that by using a mechanism called Schnorr signatures, an alternative to the current Bitcoin transaction signing mechanism, users will be able to significantly reduce the load on the cryptocurrency network.
Tweet about the launch of Bitcoin Core 22.0
The logic for activating Taproot was included in the previous version of Bitcoin Core, however, the activation of the update itself faced some obstacles. After months of heated debate, the developers agreed on an integration mechanism called the Speedy Trial with a three-month window so that miners can signal an upgrade.
Despite the fact that some programmers did not agree with this approach and even called it an “attack” on Bitcoin, by June the miners had fixed the necessary amount of support to continue implementing the update. Now that Bitcoin Core finally supports Taproot, the new protocol rules will apply to validate transactions once the update is activated, Decrypt said.
Other changes in Bitcoin Core 22.0 include full graphical user interface (GUI) support for hardware wallets. This means that users can now connect the Bitcoin Core wallet to external devices like Ledger, Trezor, or Coldcard.
In addition, Bitcoin Core 22.0 adds support for the Tor v3 browser and the Invisible Internet Project (I2P), a decentralized anonymous communication network that can be used as an alternative way to improve user privacy. It does this by escaping the IP address when making transactions on the network.
We believe that Bitcoin is unlikely to be the best alternative for Ethereum, Solana and Avalanch as an environment for the execution of smart contracts, since the latter were created specifically for their use. In addition, the same ETH has existed since 2015 and has gone through a serious path of becoming as the main platform for using such applications. At the same time, there will be benefits for the cryptocurrency industry in the update in any case. Nevertheless, many large investors still consider BTC as the main asset for investment, so various programs for the first cryptocurrency will clearly find their users. And at the same time add value to the entire industry.