Taproot offers a couple of major upgrades: Increasing transaction privacy, and more scalable and secure blockchain.
With Q4 in full swing and Bitcoin already piercing new ATHs this month, the orange coin is already up nearly 50% since the start of Oct. With the official activation of Taproot onto the Bitcoin network, investors have added reason to be bullish and celebrate as Bitcoin's fundamentals continue to strengthen.
Taproot is the first upgrade to the Bitcoin Core network in years since SegWit in 2017. Now activated per block 709632, it has been awaited for a long time.
While Taproot is designed to make Bitcoin transactions more 'private,' Bitcoin transactions have never really been 'private'—they've been 'pseudonymous,' meaning their transactions are not directly associated with a name, person, or physical address, but rather a Bitcoin wallet address that is publicly viewable by anyone, and thus traceable to other addresses.
Taproot uses what is known as "Schnorr" signatures that will enable multi-sig transactions to appear similar to P2P transactions, which ultimately enhance each wallet address's anonymity.
Additionally, Bitcoin transactions can be validated more quickly. This is because less data will be required in transactions thanks to the creation of a consolidated digital signature.
Since the Taproot upgrade has been in development since 2018, some market participants believe that any potential gains as a result may already be 'priced in.' Shortly before the upgrade was activated, the Bitcoin price was trading upwards of $65K with a market cap of ~$1.2 trillion. Despite Taproot's perceived bullish activation, the crypto market and Bitcoin alike suffered a correction on Friday following news of yet another Bitcoin spot ETF.
The constant macro-economic factor of inflation continues to wreak havoc on economies and markets around the world, however Bitcoin has continued to thrive in an inflationary environment, as environments like this are precisely the reason Bitcoin was created by the mysterious Satoshi Nakamoto. If the inflation continues, it's likely to continue to bode well for Bitcoin's adoption and price.
