Smart contracts are self-executing transactions whose results depend on pre-programmed inputs.
The enhancement, called Taproot, is the most significant change to the bitcoin protocol since the SegWit (Segregated Witness) block capacity change in 2017. SegWit effectively increased the amount of transactions that could fit into a block by pulling data on signatures from bitcoin transactions.
Noelle Acheson, head of market insights at Genesis, a digital currency prime broker, said bitcoin’s potential applications have become broader with Taproot.
“More flexible transaction types and lower costs are likely to support more development of DeFi (decentralized finance) and NFTs (non-fungible tokens) on bitcoin, and could set the stage for a wave of technological progress on the original crypto network,” she added.
The run-up to Taproot’s activation has spurred, in part, a rally in bitcoin, pushing it to an all-time high of $69,000 on November 10. Over the last two months, bitcoin has surged about 47%.
