Bitcoin is gaining more privacy features worried about an increase in cryptocurrency during the recent ransom attack.
The most significant four-year update to computer software supporting the world’s most prominent digital logo was tacitly approved last weekend. In previous years, a battle between mining groups leading the network characterized it as a civil war and led to side activities such as Bitcoin Cash.
While the most critical step forward is to make it easier to use the network in specific large embedded applications called smart contracts, the so-called Taproot update may also allow more people to access privacy wallets and services that make it difficult for anyone to know the liver.
It could improve the anonymity features valued by currency defenders, which law enforcement says are often used for illegal purposes. The United States has recently linked cyber attacks on Colonial Pipeline Co. and meat producer JBS SA to Russian groups that used cryptocurrency.
“Things are fewer fingerprints – regardless of usage or wallet,” said Adam Back, CEO of Blockstream, a developer of cryptographic services that helped Taproot.
Proponents of Bitcoin, who have long called pollution of illegal use too severe, said the changes could improve the way payments are sent to hundreds of people and how derivatives or bets on encryption are made online.
Today, the vast majority of innovative contract applications are built elsewhere on networks such as Ethereum. Taproot does not make the Bitcoin network a direct competitor because Ethereum has more developer activity and features and is easier to use. But it’s a step in that direction, and it can make Bitcoin more attractive to more users and developers.
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“It could allow them to do too big practical things or complicated programs these days, so they get more expensive,” Back said. “It would give them wider use.”
The accuracy of Taproot’s new applications may take some time.
“Developers take years to figure out how they plan to implement new types of events,” said Castle Island Ventures chief partner Nick Carter. “But it’s an opportunity for creativity. I consider it a driver insofar as it shows that Bitcoin is still able to innovate and update itself.”
Last weekend, the Taproot update was approved by the majority of miners whose computers check for events and get Bitcoin. It will be held in November.
“We seem to support anything that will increase demand for new uses for Bitcoin and the Bitcoin network,” said Fred Thiel, CEO of Mariton Digital Holdings, a Bitcoin miner who supports the upgrade. “It will ensure that it ensures the long-term viability of the Bitcoin network and mining operations.”
Taproot is a soft fork, which means the update is compatible with earlier versions of the software.
One key feature is the so-called A combined public key multi-signature that effectively hides some of the complexities of an event uploaded to the Bitcoin network. Not only does it ensure better privacy for transactions, but it also allows for cheaper transactions by reducing the amount of data stored in the blockchain.
Leading blockchain investigation services such as Chainalysis and Elliptic said they should still investigate the use.
“Taproot has little impact on Bitcoin’s traceability,” said Elliptic founder Tom Robinson. “However, there are plans to bring other privacy features to Bitcoin, which would make tracing criminal assets much more challenging. I believe Bitcoin has been able to grow in recent years in part because its traceability has stifled regulators’ concerns about its illegal use.”
Lower fees can also provide the potential for RSK and stacks that make it easier for developers to build distributed apps or app apps for Bitcoin – such as revenue services that allow people who own digital currency to earn interest on coins.