The Bitcoin network's Taproot upgrade is just one day away [Update]

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The Bitcoin network is set to receive an upgrade tomorrow dubbed Taproot. According to Taproot Watch, a website that counts down to the softfork update, Taproot will introduce a feature called MAST (Merkelized Abstract Syntax Tree) to make smart contracts more efficient and more private and it can improve the privacy of the Lightning Network by making transactions look like normal bitcoin transactions.

The improvements to smart contracts would somewhat narrow the gap between Bitcoin and Ethereum in terms of features although Ethereum will still be capable of more; that’s OK, though, because both serve different purposes. Explaining how complex smart contracts will be made available on the Bitcoin network, Katherine Dowling from Bitwise Asset Management said the following to CNBC:

“Schnorr signatures can be leveraged to let bitcoin users execute more complex smart contracts than bitcoin can currently accomplish today. That’s big, because one of the key differences between bitcoin and newer blockchains like Ethereum is their suitability for smart contracts.”

Smart contracts are essential for some of the newer innovations on blockchains such as decentralised finance (better known as DeFi) and non-fungible tokens (NFTs). Apparently, the introduction of Schnorr signatures will reduce the amount of data needed in multi-signature transactions which will reduce the load on the Bitcoin network causing transaction fees to fall further.

Nobody knows what effect this upgrade will have on the price of Bitcoin but some analysts have been predicting that the cryptocurrency will rise as high as $90,000 in the coming weeks. This upgrade and the press coverage it receives could act as a catalyst for this price movement but at the same time it could send the price the other way if there are any problems.

While the cryptocurrency space has matured a lot over the years with most exchanges working with tax collection bodies, buying into cryptocurrencies still carries with it the risk of losing some or all of your money, especially if you invest in dodgy projects like SquidCoin which saw scammers make off with $3.3 million. While Bitcoin and Ethereum are a lot more trustworthy that SquidCoin, the price is still volatile so buying while the price is high could see you lose money if the price comes back down. A good rule of thumb to follow when it comes to crypto is to only invest what you’re happy to lose.

Update: Taproot is now active!

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