Bitcoin “Taproot” Upgrade Approved

What is Taproot? Miners approve key Bitcoin upgrade

On June 12th, 2021, the Bitcoin mining community approved the “Taproot” upgrade — the biggest change to the cryptocurrency’s core protocol since 2017. The new features are scheduled to take effect in November and are intended to speed up transactions, lower fees, increase privacy, and offer greater smart contract functionality.

• Because Bitcoin is decentralized, no single entity can approve changes. For Taproot to move forward, 90% of the blocks mined in a two-week period had to signal support for the upgrade.
• Taproot will update Bitcoin’s digital signatures, which are the way you prove you own your crypto without revealing your private key.
• The upgrade increases privacy for “multi-signature” or “multisig” wallets, which require multiple people to approve transactions and are required for more complex transactions — including tight integration with the Lightning Network.
• The Lightning Network is a speedy parallel blockchain that can process transactions much more quickly and cheaply than the core blockchain — fees are typically fractions of a cent. Lightning transactions also use much less energy than transactions on the main blockchain.
• Smart contracts can utilize the Lightning Network’s speed and efficiency. As CNBC reports, developers are already building apps on Lightning in anticipation of the upgrade: “As more programmers build smart contracts on top of bitcoin’s blockchain, there is also the potential for bitcoin to become more of a player in the world of DeFi.”

Why it matters… Any change to the $669 million cryptocurrency (as of June 19) is important, and Taproot is the biggest upgrade in years. It has the potential to make Bitcoin more efficient and adaptable, and the long lead time should help prevent a scenario like 2013’s unintended hard fork — when a bug temporarily split the cryptocurrency into two incompatible versions.