The cryptocurrency revolution has just gotten to the next level as the world’s most valuable crytocurrency Bitcoin had it’s biggest update go live in four years.
Bitcoin is currently exchanging hands at $64,600 per unit and there is a lot of speculation that it will hit the $100k mark by the end of 2021. Whether it happens or not remains to be seen but the latest Taproot update will certainly be a factor whenever Bitcoin hits $100,000 (if so).
But what is the Taproot update and why was it the most-anticipated update to the Bitcoin network? Let’s find out.
According to renowned crypto research group Arcane Research, “Taproot is arguably the most important and anticipated upgrade to the Bitcoin network since Segregated Witness (SegWit), activated in 2017.” In simple terms, the update enhances privacy and smart-contract functionality of the network. It also adds lot more scalability and expansion potential for Bitcoin.
The Taproot update is described as the ‘update for the ages’ by cryptocurrency exchange Kraken. It labels the update as innovative and most significant to date.
Diving into the technicalities, the Bitcoin Taproot update is composed of three Bitcoin Improvement Proposals (BIPs). They are: Schnorr Signatures, Taproot, and TapScript.
According to Arcane Research, the BIP enable new form of payment knwon as Pay-to-Taproot (P2TR).
“[U]sers can pay to either a Schnorr public key or the Merkle root of other scripts. By validating these newer forms of transactions, TapScript provides users with a choice of being anonymous or remaining public.”
The CTO of Bitfinex describes the Taproot update as “very timely since the development on the Bitcoin blockchain has been accelerating quickly this year.”
The answer to such a question cannot be a definite one. While one school of thoughts believes that the price of Bitcoin already reflects the impact of Taproot update, another school of thought thinks otherwise.
The Taproot update guarantees higher scalability, efficiency, and functionality to the Bitcoin network and in our opinion, it is bound to impact the price of the cryptocurrency in a positive manner. However, one must do their own research before taking any investment decision.
P.S – This is not a financial advice. This article is solely penned for educational and informational purposes. Please consult your financial advisor before making any investment decisions.
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