The first major upgrade in four years is now live on the Bitcoin network, opening the door to greater privacy, security and scalability.
Bitcoin has been making headlines all week after it approached the $70k mark for the first time and set a new all time high. Hype has been surrounding the world’s oldest cryptocurrency in the buildup to the Taproot upgrade which officially launched on Saturday with block number 709,632.
The upgrade was locked in back in June when more than 90 per cent of miners on the network approved the changes.
A key part of the upgrade is the use of ‘Schnorr signatures’ – a more efficient cryptographic signature which will be used used to approve transactions.
Previously, Bitcoin relied on a cryptographic tool called ECDSA for ‘digital signatures’, used when a sender approves a transaction with their private key.
Schnorr signatures convert private keys into a shorter and more private form than ECDSA signatures. Schnorr also comes with the added benefit of allowing multiple senders to sign off on a single transaction more efficiently at a lower cost. With multi-sig transactions expected to take up less data this means that more space will be available in new blocks of transactions, improving network scalability.
The update will also improve network privacy. While all transactions made on the Bitcoin network are visible on a public ledger some payments stand out, for example those that use Bitcoin’s Lightning Network. Taproot provides developers with the toolbox to make all transactions appear uniform.
Bitcoin’s price has remained fairly flat since the upgrade, down -0.1 per cent in the past 24 hours to stand at the $64k mark.
Read more: Crypto AM Daily in association with Luno