The long-awaited Taproot upgrade to Bitcoin was finally activated on November 14, to make transactions more private and bring smart contracts to the blockchain.
Taproot was initially proposed in January 2018. It finally received approval from enough Bitcoin miners to enter the Speedy Trial phase—which gives developers five months to support the upgrade—on June 13. Now it's officially been activated.
The biggest change arriving in Taproot is the switch from using the Elliptic Curve Digital Signature Algorithm (ECDSA), to relying on Schnorr signatures for transactions. This is supposed to offer a variety of benefits for people using the cryptocurrency.
CoinDesk reported that Schnorr signatures are "smaller and faster" than ECDSA signatures. This is supposed to make it easier to handle multi-signature transactions and make them harder to spot among simpler transactions on the blockchain.
But those slightly more private transactions won't be Taproot's primary selling point for many Bitcoin owners. The switch from ECDSA signatures to Schnorr signatures is also expected to make it easier than ever for Bitcoin to support smart contracts.
"The most important thing for Taproot is...smart contracts,” Marathon Digital Holdings CEO Fred Thiel told CNBC. "It’s already the primary driver of innovation on the ethereum network. Smart contracts essentially give you the opportunity to really build applications and businesses on the blockchain.”
These advancements could help Bitcoin continue to lead the crypto market. Not that it needed any—it's managed to set new price records despite losing China's mining operations and being subject to increasing criticism over its environmental impact.