Smart contract rivalry hots up as Bitcoin community gives Taproot unanimous approval
The rivalry between Bitcoin, the world’s most dominant cryptocurrency which has enjoyed an 11 year uninterrupted tenure as the benchmark and reference point for all things relating to digital assets, and Ethereum, the brainchild of genius Vitalik Buterin which majors on technological advancement, is hotting up.
One of the key features of Ethereum that is revered among its followers and proponents is its ability to operate smart contracts, which are innate programs that run on the Ethereum blockchain.
Such contracts are part of Ethereum’s appeal, and have been part of the reason why investment bank Goldman Sachs has gone into the Ethereum trading business. Smart Contracts are a collection of code and data which resides at a specific address on the Ethereum blockchain system and can define rules, like a regular contract, and automatically enforce them via the code.
Whether the latest move by Bitcoin’s developers is an attempt at rivalry or an assimilation with Ethereum’s potential and existing smart contract market ideology, the forthcoming release of Bitcoin, which was approved over the weekend by Bitcoin miners globally and has been given the name Taproot, will unlock the potential of smart contracts.
It has been many years since Bitcoin has been subject to any form of major upgrade, the last one being half of its entire lifespan ago, in the mid to late 2010s.
This time, however, the launch of Taproot, which will include substantial upgrades to Bitcoin’s core technology and is scheduled to be released in November this year, will signify a critical increase in functionality and aim it firmly at the market which favors Ethereum for its smart contract capability, potentially saving private individuals and corporations from expensive charges when making transactions by eliminating corresponding services and middlemen.
Those with a substantial interest in Bitcoin are likely to welcome the opportunity that this upgrade will present to investable entrepreneurs who will be able to expand the way Bitcoin operates and reduce their costs by doing so.
This also represents the first Bitcoin upgrade that has received universal support from miners, unlike the previous upgrade which polarized opinions.
At that time, the polarizing issue was that Bitcoin’s underlying technology has an in-built constraint, that being its own blockchain system being only able to accept 1MB of data added to it every 10 minutes.
Some of Bitcoin’s miners began to voice their opinion that this level should be raised, whilst others wanted to keep it low, insisting that this was an intentional feature that ensures affordability of the computer resources needed to participate in the process for authenticating transactions, therefore keeping it distributed and democratic as making it less possible for small entities or individuals to participate would potentially lead to large companies dominating the process.
This debate went on for a long time, almost two years, however this time, unanimous acceptance has been achieved and the new, upgraded Bitcoin is full steam ahead for its November launch date.
One of the key changes to Bitcoin under its Taproot guise will be within its digital signature system. The current Elliptic Curve Digital Signature algo will be replaced by a different solution altogether, called Schnorr, which will scramble multi-signature transactions compared with the existing system which is created from a private key that controls a Bitcoin wallet and ensures that each Bitcoin can only be accessed by its owner.
The new system is intended to create more privacy, however perhaps the most practical part of the upgrade is the smart contract capability. The new Taproot version of Bitcoin will allow smart contracts to be smaller and therefore will take up less storage space on the Blockchain, resulting in more cost efficiency. These small contracts can then be used for absolutely any purpose in every day life including paying bills to signing freelance agreements.
At the moment, under the current version of Bitcoin, smart contracts do exist and can be created via the Lightning Network which enables instant payments, and developers have already begun to improve the functionality of that platform, in anticipation of the upgrade, which increases is functionality and allows users to create contracts for any purpose, and be very specific as to what they will be used for.
Flexibility here is the key.
Many miners consider this to be a huge leap forward, and note that the smart contract flexibility is one of the main facets that have driven the enthusiasm in the Ethereum network and have led Ethereum to its position as the most popular Blockchain for decentralized finance applications for cutting out middlemen.
Now the upgrade has been approved, the rigorous testing stage begins, which, if all goes smoothly should lead the new Taproot version of Bitcoin into circulation in November with an actual date yet to be announced.