Recently, took place the official release of the new version of the Bitcoin Core client. What significance will this update have for the future of cryptocurrency?
The main client through which interaction with Bitcoin Core is carried out (the main cryptocurrency network) was updated to version 22.0. In November 2021, the integrated Taproot protocol should be activated, which became the main feature of this update. Such an action to improve the existing program will significantly increase the coverage of BTC. This is due to the fact that the update will soon expand the range of possibilities of smart contracts on Bitcoin. Next, we will tell you about the details of this event.
At their core, smart contracts are designed to interact with the blockchain. They allow the parties involved to conduct mutual operations and not be afraid of the lack of retaliatory actions on the part of the partner.
Ethereum has gained its popularity largely due to smart contracts, since initially the purpose of creating this network was to interact with them. It is worth noting that the set of functions of these applications is almost limitless and depends only on the imagination of developers. In this regard, in the summer of 2020, the industry has passed through a stage of vigorous development of the sphere of decentralized finance, and at the moment unique NFT tokens are especially popular.
There is an opinion that a similar story awaits the Bitcoin blockchain, even if not in such comfortable conditions. But at the moment, programmers associated with BTC are making great efforts to implement the Taproot protocol. For the most part, the update is aimed at increasing the degree of anonymity and efficiency of transactions and providing the opportunity to use smart contracts, which will reduce the cost of the workflow and reduce the amount of space occupied in the blockchain.
Recently, the head of Marathon Digital Holdings, Fred Thiel, spoke about the prospects for activating Taproot. His words are quoted by CNBC.
«The most significant component of Taproot is smart contracts. Innovations in the Ethereum network are already largely based on these elements of transaction-related operations. In fact, smart contracts make it possible to create applications and full-fledged enterprises based on the blockchain».
It is planned to start work in this direction soon.
What is the purpose of the Taproot upgrade?
Bitcoin developer Gregory Maxwell first made a proposal to improve Taproot back in 2018 and considered this action as one of the options for introducing smart contracts into the cryptocurrency system, while increasing the degree of coverage and confidentiality of transactions. After the integration of Segregated Witness or SegWit was carried out in August 2017, no BTC upgrade has reached such a degree of importance as Taproot.
Especially noteworthy is the fact that Taproot has a unique feature to reduce the load on the cryptocurrency network by using a mechanism called the Schnorr signature. It is an alternative to the existing method of signing transactions in Bitcoin.
The foundation for activating Taproot was laid in the previous version of Bitcoin Core, but the implementation of the upgrade faced a number of problems. It took the developers several months to come to an agreement on the integration mechanism, which was called the Speedy Trial. It was decided to give a three-month window for miners to have the opportunity to signal an update.
Some programmers reacted negatively to this approach and considered it an “attack” on Bitcoin, but by June, the miners had recorded the amount of support that made it advisable to continue implementing the upgrade. Decrypt reports that after Bitcoin Core began to support Taproot, the new protocol regulators will be used to verify transactions after the update starts working.
Support for a full graphical user interface (GUI) for hardware wallets has become another change in Bitcoin Core 22.0. The introduction of this feature means that the Bitcoin Core user wallet can be connected to external devices such as Ledger, Trezor or Coldcard. In addition, Bitcoin Core 22.0 now supports the Tor v3 and Invisible Internet Project (I2P) browsers, which are a decentralized anonymous communication network used as an additional way to improve the anonymity status of users. This is made possible by masking the IP address during transactions on the network.
In our opinion, Bitcoin is unlikely to be able to become a full-fledged replacement for Ethereum, Solana and Avalanche when executing smart contracts, since these systems were created with this functionality in mind. In addition, ETH has been in existence since 2015 and, through continuous improvement, has become the main platform for the application of these apps. However, it is worth saying that the cryptocurrency industry will definitely receive a number of advantages from the new upgrade. At the moment, most large investors still consider BTC as the main asset for investing funds, and therefore a variety of programs working with the first cryptocurrency will definitely receive their users, which will increase the value of the industry as a whole.
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