Taproot: The next Bitcoin disruptive innovation
Introduction
A new cryptocurrency is released every day in the crypto industry, promising to kill Bitcoin by implementing some dubious benefits. They promise to make you rich by holding, the biggest lie used, or lower fees, privacy, smart contracts, security, etc. Up to date, there are over 10,000 different types of digital money [1].
However, is there a Bitcoin killer?
No, there is not. Bitcoin is the first disruptive innovation in the cryptocurrency market when Satoshi Nakamoto introduced a peer-to-peer electronic cash system [2]. Bitcoin has the most secure system, the biggest community [3], the best programmers, and is now going to implement great innovations.
This report presents Bitcoin Taproot softfork, a Bitcoin update that will impact the investing market overall. Once this implementation is approved, forget about the death cross, the symmetrical triangle, downtrend lines, or Wyckoff distribution and buy the dip.
What is Taproot?
In a few words, Taproot is a proposed Bitcoin protocol upgrade that promises to expand Bitcoin’s smart contract flexibility, more privacy, Lightning Network boost, lower transaction fees, and increases Bitcoin’s fungibility. Taproot was proposed by the genius programmer of Bitcoin Core Gregory Maxwell in January 2018 [4].
Bitcoin’s smart contract flexibility — Taproot softfork will implement more flexibility in the Bitcoin Network by introducing a new type of signature that enables users to set more complicated conditions for a transaction;
More privacy — Taproot and Schnorr signatures will make complex transactions no longer be distinguishable from simple single signatures;
Lightning Network boost — Taproot also improves efficiency and the privacy of routing in the Lightning Network, flexibility, and cheaper transactions.
Lower transaction fees — The softfork reduces dramatically the transaction data size and transaction fee costs will decrease.
Bitcoin’s fungibility — Once outputs will be indistinguishable, it will increase privacy.
Taproot activation
You can watch Taproot activation by accessing: https://taproot.watch/ [5]:
As can be observed in Figure 1, the current signaling is 97.74%. After 2016 blocks, if the signaling ratio is more than 90%, the Taproot softfork is approved. We are taking big steps towards approval.
Finally, important mining pools are changing their positions about Taproot, like Marathon and Binance pools, and now 99.15% of mining pools are supporting Taproot activation (Figure 2).
Conclusion
Dr. Ron Paul is quoted as saying “Monetary freedom is not about free money”. This points to the fact of the importance of understanding and investigating the networks before investing. Monetary freedom is the way to guarantee individual freedoms. You have to look besides technical analysis.
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Acknowledgments
The author is grateful to Satoshi Nakamoto, Hal Finney, Nick Szabo, Changpeng Zhao, Sabrina Moraes, Fernando Ulrich, André Fauth, Criptomaníacos, and Vela Trader.
References
1. https://finance.yahoo.com/news/number-cryptocurrencies-exploding-learn-different-124923879.html
2. https://bitcoin.org/bitcoin.pdf
3. https://medium.com/coinmonks/bitcoin-what-was-what-is-and-what-probably-will-be-8aba4d01eb7b
4. https://hackernoon.com/taproot-and-schnorr-the-biggest-btc-upgrade-for-2021-2t1w332g
