A Look Into the Next Evolution of Bitcoin Happening Soon | ETF Trends

The next upgrade for bitcoin is expected to hit any day, possibly over the weekend, and with it will come a series of changes that are promising for the blockchain.

Taproot, the next big upgrade for the blockchain, is slated to take effect at block 709,632 and will introduce a few key changes, reports CNBC. It will be the first big update that the network has experienced since 2017 and will introduce something called Schnorr signatures.

Schnorr signatures are the key to this update, as they will allow for the expansion of smart contracts (digital agreements that are stored in code on blockchains), ensure better privacy for users, and bring the costs of transactions down.

The smart contract change will expand the capabilities on the bitcoin blockchain, which previously had fairly narrow limitations. Smart contracts are a key component of DeFi and NFTs, both areas that the Ethereum network has dominated until now.

“Bitcoin has historically been much more limited in accommodating smart contracts,” Katherine Dowling, general counsel and chief compliance officer of Bitwise Asset Management, told CNBC Make It. “But, while bitcoin likely won’t ever be as flexible as Ethereum from a smart contract standpoint, with Taproot that gap will now narrow.”

Another change will be one that allows for multiple signature transactions to appear as a singular, standard transaction, and will be identical looking to a simple transaction for outside parties. This allows for more privacy and anonymity for those utilizing multi-signature transactions, such as with smart contracts.

The amount of data that is needed to complete multi-signature transactions is also being decreased, and will help to simplify and thereby reduce the costs of transactions. Less data means less energy used and better time efficiency, something that will benefit the blockchain all around.

Taproot will “set the foundation for the next phase of innovation in the bitcoin protocol,” Dowling believes. “We expect this upgrade to unleash a new wave of innovation in bitcoin focused mainly on smart contracts.”

For investors who are looking for a way to gain exposure to the largest cryptocurrency globally, Grayscale offers the Grayscale Bitcoin Trust (GBTC). The fund is benchmarked to the CoinDesk Bitcoin Price Index and seeks to reflect the value of bitcoin (BTC) held by the trust with the value of the shares.

The fund allows investors to gain exposure to bitcoin through a secure structure. By gaining exposure in the form a security, investors don’t have to buy, store, and safekeep bitcoin (BTC) themselves. Bitcoin via the fund is stored in cold storage with Coinbase as the custodian.

ETHE allows investors to have shares that are titled to their name, auditable, easy for financial and tax advisors to account for, and easy to transfer to beneficiaries. The trust is an SEC-reporting company registered pursuant to Section 12(g) of the Securities Exchange Act of 1934.

The fund has an annual fee of 2.0% and currently has $43.6 billion in AUM.

For more news, information, and strategy, visit the Crypto Channel.