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Utilities of Taproot Update

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Snapshot

  • Enhanced Usability
  • Improved Privacy and security
  • Enhanced capabilities of Smart Contracts and Improved Efficiency
  • Bitcoin vs. Ethereum

The Taproot upgrade is the latest update of Bitcoin since SegWit in 2017. The new update has made it possible for the developers to explore a broader set of possibilities, which earlier wasn’t possible. Features like smart contracts, which were always present on the Bitcoin network couldn’t be explored by the developers as they were much costlier, limited in terms of transactions, and more time-consuming. Some of the utilities that will be added to the Bitcoin network after the Taproot upgrade involves:

Enhanced Usability

The new update will increase the efficiency of the Bitcoin wallet, as the wallet will be able to support multiple transactions which could be hashed together as a single transaction. When many applications are required to be streamlined, this feature can be extremely useful. The best example to explain can be, using a single wallet address for transactions from multiple parties. This utility will enhance the Bitcoin network as all Bitcoin day-to-day transactions will have a faster throughput and the fee levied will be much less. 

Improved Privacy and security

The Taproot upgrade will improve efficiency as it would obfuscate certain complex transactions on the chain. This will be achieved by masking the spending details of certain transactions. 

If resources are to be believed, the main beneficiary of this feature will be large custodians and institutions, which require keeping their signature schemes and security private. The MAST (Merkelized Abstract Syntax Tree) and Schnorr upgrade of the Taproot will provide obscurity to transactions, thus making them completely secure and private. 

Enhanced capabilities of Smart Contracts and Improved Efficiency

After the upgrade, all the transactions on the Bitcoin network will become more data-efficient, decrease the transaction cost, and optimization of block capacity. Schnorr signatures upgrade will ensure that the Bitcoin network can utilize its smart contract capabilities. 

Enhanced capabilities of smart contracts will provide better scalability and flexibility, enabling them to support NFTs and DeFi on Bitcoin. This new update could also become a foundation stone for technological innovations on the original crypto network.

Bitcoin vs. Ethereum

It is for sure, that the new upgrade will increase the efficiency of the Bitcoin Network, and deploying smart contracts will allow Bitcoin to come into a race with DeFi and dApps host, Ethereum. There is a lot to be achieved yet by the Bitcoin network. All Bitcoin services, such as wallets and exchanges are required to be upgraded so that they can support Taproot features. At present, Bitcoin is far behind Ethereum and its other smart contracts supporting peers. 

The new update is expected to bring an increase in the day-to-day applications of Bitcoin.                        

Disclaimer: The article should not be considered as any financial advice. It is advisable to conduct thorough research before investing.

Photo by – mohamed_hassan on Pixabay