Bitcoin’s long-anticipated “Taproot” upgrade has arrived, as developers and miners activated the relevant code on Sunday, Nov. 14 at 5:15 UTC.
Taproot Adds Several New Features
Taproot adds several powerful features to Bitcoin. Most notably, it allows developers to write Bitcoin scripts and create more complex Bitcoin-powered applications. By contrast, most websites integrate very simple Bitcoin transactions at the moment and only allow for basic Bitcoin payments.
This capacity for scripts or “smart contracts” will allow Bitcoin to more effectively compete with other recent blockchains like Ethereum, which has supported smart contract capabilities since it was launched in 2015.
Taproot will also give Bitcoin greater privacy features by making most Bitcoin transaction outputs look similar to one another. For example, second-layer Lightning Network transactions and multisig transactions will begin to look much like basic Bitcoin transactions. This means that analytics firms will find it relatively difficult―but not impossible―to track and trace Bitcoin transactions.
Finally, Taproot will improve efficiency and reduce the amount of data that each Bitcoin transaction requires. For end-users, this will likely translate into lower fees and faster completion times for each transaction that they perform.
Bitcoin Briefly Hit an All-Time High
Bitcoin’s Taproot update arrived days after Bitcoin surpassed an all-time high of $68,000 and the entire crypto market reached a $3 trillion market cap.
This new high was likely driven by the hype around the upgrade itself. However, other factors could also be at play. The launch of various Bitcoin futures ETFs and lasting interest from financial institutions could also be behind this recent price rally.
The initial hype around Taproot has now passed, and Bitcoin prices have fallen slightly. At the time of writing on Nov. 24, BTC is now valued at $54, 185.