The Taproot update is designed to improve transaction performance and privacy.
Bitcoin received its first update in four years - a rare example of community consensus and a real event for the world's most popular cryptocurrency.
The update, dubbed Taproot, aims to improve transaction performance and privacy, and unleash the potential of smart contracts that can be used to exclude intermediaries from transactions.
Most of the update is related to digital signatures, which are analogous to the fingerprints left by a person with every transaction, according to CNBC.
The cryptocurrency currently uses the Elliptic Curve Digital Signature Algorithm (ECDSA), which generates a signature from the private key that controls the bitcoin wallet and ensures that only legitimate owners can spend bitcoins. Taproot implements so-called Schnorr signatures, which make multi-signature transactions unreadable, explained bitcoin miner Alejandro De La Torre.
The Schnorr implementation does not enhance the anonymity of individual bitcoin addresses on the public blockchain, but it will make simple transactions indistinguishable from more complex ones with more signatures.
In practice, this means improved privacy as the user's keys will not be "flashed" too often on the blockchain.
Although the bitcoin community approved the update back in June 2021, it was only rolled out in November. It took several months to test and troubleshoot issues that may arise after the upgrade.
Bitcoin received its first update in four years - a rare example of community consensus and a real event for the world's most popular cryptocurrency.
The update, dubbed Taproot, aims to improve transaction performance and privacy, and unleash the potential of smart contracts that can be used to exclude intermediaries from transactions.
Most of the update is related to digital signatures, which are analogous to the fingerprints left by a person with every transaction, according to CNBC.
The cryptocurrency currently uses the Elliptic Curve Digital Signature Algorithm (ECDSA), which generates a signature from the private key that controls the bitcoin wallet and ensures that only legitimate owners can spend bitcoins. Taproot implements so-called Schnorr signatures, which make multi-signature transactions unreadable, explained bitcoin miner Alejandro De La Torre.
The Schnorr implementation does not enhance the anonymity of individual bitcoin addresses on the public blockchain, but it will make simple transactions indistinguishable from more complex ones with more signatures.
In practice, this means improved privacy as the user's keys will not be "flashed" too often on the blockchain.
Although the bitcoin community approved the update back in June 2021, it was only rolled out in November. It took several months to test and troubleshoot issues that may arise after the upgrade.
