Bitcoin is gaining more privacy as concerns about the use of cryptocurrency in many ransomware attacks increase.
The most important update made in four years on the computer software that supports the largest digital token in the world was approved last weekend with a few fanfares. In recent years, battles between teams known as network miners have been described as a civil war and have led to ramifications such as Bitcoin Cash.
While major advances are making the network easier to use for some built-in applications called smart contracts, the so-called Taproot update could allow more people to use privacy wallets and services, making it even harder to figure out who is paying. This could enhance the anonymity of his supporters currency, which law enforcement says is often used for illegal purposes. The United States has recently linked cyber attacks against it Colonial Pipeline Co. and JBS SA with Russia-based ransomware groups that used cryptocurrency.
Proponents of Bitcoin say the changes could improve the way payments are sent to hundreds of people and the way crypto derivatives or bets are placed online.
Today, the vast majority of smart-contract applications are built elsewhere, on networks like Ethereum. Taproot will not make the Bitcoin network a direct competitor, as Ethereum has more activity and developer capabilities and is easier to use. But this is a step in that direction and could make Bitcoin more attractive to more users and developers.
The exact new applications that Taproot will activate will take some time to determine. The Taproot update was approved last weekend by a majority of miners whose computers verify transactions and are rewarded with Bitcoin. It will take place in November.
"Obviously we support anything that will increase demand for new uses of Bitcoin and the Bitcoin network," said Fred Thiel, CEO of Marathon Digital Holdings, a Bitcoin miner who supports the upgrade.
Taproot will be a "soft fork", which means that the upgrade will be compatible with previous versions of the software. A key feature will be the so-called centralized public key signature, which effectively hides some of the intricacies of a transaction posted on the Bitcoin network. Not only does it ensure greater transaction confidentiality, but it also allows for cheaper transactions by reducing the amount of data that will be stored in the blockchain.
Source of information: bloomberg.com