Bitcoin just got a huge upgrade - here's what it means.

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Bitcoin just got a huge upgrade - it's called Tap Root, here's what it means, what it does, and what the price of Bitcoin will be as a result.

There’s 3 main upgrades that are in Tap Root. The first is an upgrade to privacy. For the longest time people believed that using Bitcoin meant you could anonymously pay people for stuff, but it turns out Bitcoin is pseudo anonymous. That is why the FBI was able to seize money from Darkside.

WHO CARES ABOUT PRIVACY?

It matters because right now there are other cryptocurrencies that exist specifically because of 1 feature that they do better than everyone else for example - Monero which is considered to be the most private and anonymous coin to date. It has a market cap of several billion dollars and now Bitcoin will be competing in the future.

The second upgrade:

The second upgrade to Bitcoin is something called Shnorr signatures. Shnorr signatures is what allows the first upgrade to happen, but it’s also got a few tricks up its own sleeve like improving efficiency.

When Satoshi Nakomoto created Bitcoin, he designed it with something called the Elliptic Curve Digital Signature Algorithm or (ECDSA). If you ever wondered, how is it that I can send Bitcoin to someone without them knowing my private key? How am I sending Bitcoin from my wallet, how does it know not to send Bitcoin from someone else’s wallet? It works because of your private key.

UNIQUE DIGITAL SIGNATURE:

Your private key creates the unique digital signature, and your public key, which is what you share with someone when you pay or get paid, for example mine looks like this - in case you’re feeling generous - and this public key is what is used to verify your private signature that way the receiving wallet knows that it came from you. That’s how you’re able to send Bitcoin to someone without broadcasting your entire private key to the network because if you did, they also would get access to your output aka your actual wallet. To put it way easier, think of it like signing a check - once you sign your check, people know the money belonged to you.

WHAT THIS ALL MEANS

it’s going to help Bitcoin create better Smart Contracts which is something Ethereum is capable of doing that Bitcoin is not really that good at. This is because by changing the digital signature structure - it will allow Bitcoin to create smart contracts that ECDSA cannot or at least no where near as efficiently. This is because this new structure shrinks multiple transactions into one, you can improve efficiency and cost.

THE LIGHTNING NETWORK

Bitcoin can handle 5 transactions per second, no where near enough for the entire world. Visa can handle 65,000 per second. In order for Bitcoin to become a true currency, it has to fast and cheap. How do you create something like that without compromising the base layer of Bitcoin? Layer 2 scaling solutions like Lightning. This upgrade moves us 1 step closer to that goal.

WHEN WILL IT HAPPEN?

It will happen sometime in November of 2021.

PRICE PREDICTION

What will happen to the price of Bitcoin? Most likely - the price will do nothing - at least not right away. As developers explore this upgrade more and as they continue developing the lightning network, that will eventually increase the value of Bitcoin but the upgrade itself will most likely not have any major effect on the price.

Bitcoin's price is currently dependent on the narrative (a good story) like countries adopting it as a national currency. Or when Elon Musk and Tesla decide to have a good day and tweet something positive. In the long term though, this is a huge leap forward.

*None of this is meant to be construed as investment advice, it's for entertainment purposes only. Links above include affiliate commission or referrals. I'm part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.