Bitcoin reform after 4 years! Taproot demonstrates the potential of smart contracts to improve privacy and operational efficiency.

Bitcoin The first reform in four years has started. This is a rare opportunity for participants to reach consensus and is essential for the world's most popular cryptocurrency.

Zhitong Financial APP understands that updating Taproot means more privacy and operational efficiency, and most importantly, it can unlock the potential of smart contracts, the importance of blockchain technology, and even exclude those in the middle of the lesser industries. more difficult.

“Taproot is important because it offers many opportunities for investors looking to expand their use of Bitcoin,” said Alyse Killeen, Founder and Managing Partner of Stillmark, a financial services company. Focus on Bitcoin.

Unlike the Bitcoin 2017 upgrade, which made a big difference in upgrades, Taproot has almost all of the support. Partly because these changes include further improvements to the rules.

Switch to the taproot

Bitcoin conversion has a lot to do with the digital signatures, such as fingers, left by people with each exchange. Currently, Bitcoin uses an algorithm called the Elliptic Curve Digital Signature Algorithm, which creates a private key that controls the Bitcoin wallet so that only legitimate owners can use Bitcoin. .

According to Bitcoin miner Alejandro De La Torre, the taproot modification would be replaced with the signature "Schnorr", making many signatures unreadable, meaning more secure.

smart contract

These signature improvements also change the rules of the game for smart contracts, which complement the blockchain process. In theory, smart contracts can be applied to almost any type of business, from rents to car registrations. When it comes to the smart contract space on the blockchain, Taproot makes smart contracts cheaper and smaller. Killeen said the improvements and performance saw "incredible potential".

Currently, smart contracts can be developed through the basic Bitcoin process or through the Lightning Network, a Bitcoin-based payment platform, which supports instant transactions. Smart contracts running on the Lightning Network generally make trading faster and cheaper.

Manufacturers have started betting on lightning for development purposes and can sign special contracts.

Fred Thiel, CEO of Marathon Digital Holdings, said: “Smart contracts are an essential part of Taproot. Smart contracts are already a major driver of innovation in the Ethereum network. Smart Commitment provides the real blockchain design ... Applications and Marketplace. "

As more programmers create smart contracts at the top of the blockchain, Bitcoin could play an important role in the world of DeFi (decentralized finance).

Currently, Ethereum plays a key role in the blockchain of these applications, also known as “dApps”.

To reduce these errors, Taproot waited months.

The Bitcoin community approved the reform in June, but only supported the reform in November. A period of several months is intended to allow sufficient time for testing to minimize the possibility of errors during the repair.

Quantum economics analyst Jason Deane said: "After the upgrade, the system is unlikely to malfunction. It will make people lose confidence in the whole process. Standard cryptocurrency. It's is a form of self-harm, injury. ". "

Deane emphasizes that this is why modification procedures should be carefully tested, retested, and evaluated over time.

Many users in the community still remember the abysmal nature of the 2013 migration, when Bitcoin was split in two due to a forced adjustment.