Bitcoin's update could happen any day. Along with it, a number of promising changes for the blockchain will appear.
According to the American news channel CNBC, the next major update for the blockchain is due to take effect at stage 709,632 and will make several key changes. This will be the first big update that the network will experience since 2017, which will introduce the so-called Schnorr signatures.
Schnorr's signatures are the key to this update, as they will expand smart contracts (digital agreements that are stored in code in blockchains), provide better privacy for users, and reduce transaction costs.
Changing the smart contract will expand the capabilities of the bitcoin blockchain, which previously had limitations. Smart contracts are a key component of DeFi and NFT, both areas in which the Ethereum network has so far dominated.
According to Katherine Dowling, the chief specialist and compliance director of Bitwise Asset Management, Bitcoin has been limited in the use of smart contracts historically; perhaps, it will never become as flexible as Ethereum, but from the point of view of smart contracts with Taproot, the gap will now narrow.
Another change will be one that will display transactions with multiple signatures as a single standard transaction and will be identical to a simple transaction for external parties. This provides greater privacy and anonymity for those who use transactions with multiple signatures, for example, with smart contracts.
The amount of data required to perform transactions with multiple signatures is also reduced, which will help simplify and thereby reduce transaction costs. Less data means less energy consumed and better time efficiency, which will benefit the entire blockchain.
Dowling said that Taproot will serve as the basis for the next stage of innovation in the Bitcoin protocol.
