As Bitcoin’s Taproot Upgrade Goes Live, BTC Moves Close to Its All-Time High

After trading sideways over the last week, Bitcoin picks up the upward momentum as it Taproot upgrade goes live on Sunday, November 14. As of press time, the world’s largest cryptocurrency is trading at a price of $65,893 with a market cap of $1.24 trillion.

Bitcoin is trading very close to its all-time high of $66,000 as the Taproot protocol brings a ton of upgrades to the Bitcoin blockchain network. Taproot is also the first Bitcoin upgrade after the implementation of SegWit back in 2017.

The Taproot protocol upgrade touches upon multiple benefits like improving Bitcoin network privacy, adding smart contracts, reducing transaction complexity and improving efficiency.

One of the biggest changes that the Taproot upgrade brings is about digital signatures. These signatures serve as fingerprints left by the transacting parties. As of now, the Bitcoin blockchain uses the “Elliptic Curve Digital Signature Algorithm”. This creates a signature from the private key that will control the Bitcoin wallet. It also ensure that only the rightful owner can spent his/her Bitcoins.

Taproot protocol will further add Schnorr signatures which will further make multi-signature transactions unreadable. This will help in reducing the anonymity of individual Bitcoin addresses on the public blockchain network but will make transactions indistinguishable from the complex ones. This will lead to greater privacy since the keys won’t have major exposure on the chain.

Another game changing moment that Taproot introduces is the introduction of smart contracts. These self-executing agreements can open up multiple use-cases apart from just executing financial transactions.

Taproot will make smart contracts smaller and cheaper in terms of the space they occupy on the blockchain. Currently, users can create smart contracts on the core Bitcoin blockchain as well as the Layer 2 Lightning Network platform. Smart contracts execution on the Lightning Network will further lead to faster and less costly transactions.

Developers have already started building atop the Lightning Network upgrade which will allow only for specific smart contracts. With these improvements, Bitcoin can now pose a direct competition to giant platforms like Ethereum.

It will also allow Bitcoin to step into the rapidly growing world of decentralized finance (DeFi)as well other decentralized applications.

The Taproot upgrade can potentially lead to a strong rally in the BTC price going ahead. The previous SegWit upgrade took place in August 2017, following which Bitcoin touched a high of $20,000 by December of the same year. If Bitcoin follows the same trajectory this time as well, it is all set for a rally to $100,000 and much above by the end of this year.