You may have noticed the green squares all over Twitter. Just like laser eyes, they are part of an internal signal that creates a sense of cause and belonging. Unlike laser eyes, which are not directly related to price, they indicate support for the Bitcoin network’s proposed Taproot upgrade.
Why is this important? It’s not just the significant benefits that come with the upgrade. taproot is important because it reminds us of where bitcoin stands.
The Benefits of Upgrading
Before we dive into why this is important, let’s look at some of the main benefits of this upgrade.
Increased privacy: This doesn’t refer to bitcoin addresses or enhanced anonymity; it refers to the type of transaction. taproot will make complex transactions, such as those requiring multiple signatures or delayed triggers, indistinguishable from simple transactions in terms of their on-chain footprint.
Lower fees: Complex bitcoin transactions will have less data, thus reducing transaction costs.
More flexibility: A new type of signature will enhance Bitcoin’s smart contract capabilities, making it easier and cheaper for users to set up more complex transaction conditions.
Benefit the Lightning Network: Taproot will make transactions on the Lightning Network cheaper, more flexible, and more private. The Lightning Network is a second layer solution that enables faster, more scalable payments that are regularly anchored to the Bitcoin network in an aggregated form, providing the ultimate in Bitcoin security while increasing speed and potential throughput.
A Meaningful Step
Taken together, Taproot is the most significant upgrade to the Bitcoin network since the 2017 block expansion. The relative infrequency of Bitcoin upgrades highlights one of its key characteristics: it is robust.
Making any changes to Bitcoin is difficult. There is no one “person in charge” who can decide what changes to implement. Taproot has more or less unanimous support, which underscores the significance of this upgrade.
What was controversial, however, was the approach to the upgrade. In March, the community reached a compromise in the form of a “speed trial” that gave miners a series of two-week blocks to show their support for Taproot.
This began last Saturday, along with the recent difficulty adjustment. From that point on, Bitcoin miners were required to signal support for the Taproot upgrade in the blocks they mined until the next difficulty adjustment (two weeks later). If 90% of the blocks processed show support, the upgrade will be “locked” and activated in November.
However, on Tuesday, it was clear that this round of signals would not be successful. By midday, the 90 percent threshold could not be reached as about 25 percent of the blocks were processed during this time period, while 20 percent did not indicate support.
This wasn’t so much a problem as a rejection of the proposal, but rather that the miners hadn’t gotten their heads around it or their software hadn’t been tuned for the necessary steps. The next two-week signal window is approaching, and if it still fails, the Bitcoin network will try again until August 11. If 90% of the signals have not been achieved by that time, the Taproot upgrade proposal will have to go back into revision.
The Real Benefits
Taproot’s upgrade will therefore enhance Bitcoin’s functionality and potentially expand its market. This is good for its prospects and valuation.
But the most important impact for the investment market as a whole is this: it reminds us that Bitcoin is a technology. Many investors see bitcoin as a store of value. Others are attracted to its volatility. Most tend to overlook one of its most defining characteristics: it’s a relatively new technology.
When you buy gold, you don’t want to know how it will evolve in a vault, whereas bitcoin does. It did so in 2017, and it will likely do so again this year.
However, with “technology” comes risk, the possibility of mistakes, bugs in the code, or unintended consequences. That’s why bitcoin is rarely upgraded and at long intervals, because they need to be carefully reviewed and tested. In addition, since there is no central authority to decide on bitcoin upgrades, they require the agreement of all key stakeholders, and reaching consensus is always extremely difficult.
This is a good thing. With the market cap of the Bitcoin network now exceeding $1 trillion, not to mention the valuation of all the businesses that support it, the risk needs to be reduced to almost negligible levels.
Taproot makes it clear that Bitcoin may be a good store of value, and it may offer good returns for speculators, but cryptocurrencies also represent an opportunity to participate early in transformative technology investments. It’s like being able to get an early stake in a hot startup, but with more liquidity and less paperwork.
As such, Taproot will not only increase the availability of Bitcoin, which could expand its market and thus potentially its value. It also reminds us of a core feature of Bitcoin that seems to have been overwhelmed by the market-driven narrative that has prevailed recently. Bitcoin is still a new technology, and its potential advantages go beyond its supply schedule, inflation resistance, and decentralization.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/why-is-a-bitcoin-taproot-upgrade-critical/
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