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Bitcoin’s biggest upgrade in four years activates – here’s why it could be bad for Ethereum

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  • The taproot upgrade has activated, the biggest one since yet another upgrade four years ago tore apart the Bitcoin community in a civil war.
  • Taproot will enhance privacy and even cut costs, but it could spell trouble for Ethereum moving forward.

The biggest upgrade on the Bitcoin network in the past four years has activated at last. Taproot upgrade will enhance privacy for Bitcoin through a change in the network’s signature algorithm and even lower the transaction costs. But it could also spell trouble for Ethereum, the king of altcoins and the ultimate dApp and DeFi network.

Taproot was proposed by core developer Greg Maxwell back in January 2018. It was eventually approved unanimously by BTC miners in June this year. Since then, the developers have been testing and reviewing the upgrade. It’s now live on the BTC blockchain, having activated today, November 14.

The aim is to make Bitcoin more private and secure for its users, as well as set the stage to make it more scalable. All these go towards giving Bitcoin more utility, Alyse Killeen believes. The founder and managing partner at Stillmark, a Bitcoin VC firm commented:

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Taproot matters, because it opens a breadth of opportunity for entrepreneurs interested in expanding bitcoin’s utility.

What is Taproot, and why is it a big deal?

Bitcoin developers and users are quite excited about the activation of Taproot, and rightfully so. It could usher in a new dawn for Bitcoin and hopefully reignite BTC as the ultimate cryptocurrency.

One of the biggest changes will be on privacy on Bitcoin. Taproot will finally change the signature algorithm that Bitcoin has relied on for years. Signatures on Bitcoin are kind of like a fingerprint that you leave on every transaction you conduct with your wallet, linking you to that transaction.

For years, we’ve relied on the Elliptic Curve Digital Signature Algorithm which creates the signature from the private key that controls your wallet. We will now rely on Schnorr Signatures which will make Bitcoin transactions more private and secure. The biggest effect will be on multi-signature transactions which will be virtually unreadable. The change will be a result of the activation of Bitcoin Improvement Proposal (BIP) 340.

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“You can kind of hide who you are a little bit better, which is good,” Brandon Arvanaghi, a Bitcoin developer and founder of corporate cryptocurrency investment platform Meow pitches in.

It’s, however, important to note that Schnorr Signatures won’t make Bitcoin a privacy coin like Monero or make it impossible to trace your transactions.

Taproot will also go a long way in making smart contracts more ubiquitous on Bitcoin. As it stands, smart contracts are available on Bitcoin, both on its core layer and on the Lightning Network. However, not many think of Bitcoin as a smart contracts platform. Ethereum is the dominant player in this sector. In fact, smart contracts are the biggest reason that Ethereum has soared. They are behind decentralized applications (dApps) and decentralized finance (DeFi), both of which have made Ethereum the dominant force it is today. They also made NFTs possible.

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Taproot will make it easier to execute smart contracts on Bitcoin, making them cheaper and smaller when it comes to the space they occupy on the BTC blockchain.

Fred Thiel, the CEO of Bitcoin miner Marathon Digital Holdings, commented:

The most important thing for Taproot is smart contracts. It’s already the primary driver of innovation on the Ethereum network. Smart contracts essentially give you the opportunity to really build applications and businesses on the blockchain.

It’s on this metric that Taproot poses the biggest danger to Ethereum. Already, Ethereum is facing competition from other altcoin projects, with Polkadot, Solana, BSC, Cardano, Avalanche, Terra and TRON already seeing billions of dollars in total value locked on their DeFi projects.

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However, competition from Bitcoin would be a completely new dragon to slay for the Vitalik Buterin-led project. Bitcoin already has the brand name and is the most recognizable project. It’s also worth way more and it has the biggest following. And all this is before smart contracts become popular on the Bitcoin blockchain.

Already, there are efforts to bring DeFi to Bitcoin. One of the most prominent is by foremost Bitcoin maximalist and Twitter boss Jack Dorsey Back in July, he announced that his other company Square would launch a new business “with the sole goal of making it easy to create non-custodial, permissionless, and decentralized financial services. Our primary focus is Bitcoin,” he tweeted at the time. There are rumors that this business is about to launch, just as Taproot is activated (coincidence? Don’t think so).

Aside from the benefits it brings, Taproot is also symbolic for Bitcoin, and this is just as important. The last time Bitcoin received an upgrade was four years ago, and it didn’t go too well. This was the Segregated Witness (SegWit) upgrade that led to a civil war and infighting in the Bitcoin community and eventually led to some forking away to form their own Bitcoin iterations.

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In his 29-page report on Taproot, Arrington Capital’s Ninos Mansor noted:

The upgrade could be a macro turning point for evolvability and innovation, merging the best of post-Segwit conservatism with the energy of new beginnings. It is a meta-upgrade, a chance to redefine what it means to contribute to bitcoin, whether one is a miner, developer, or full node.

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Bitcoin Miner Riot Blockchain Purchased ESS Metron for $50 Million

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Riot Blockchain paid $25 million in cash, while the other $25 million consisted of up to 715,413 Riot shares to acquire ESS Metron.

One of the leading cryptocurrency mining companies in the US – Riot Blockchain – acquired the electrical equipment provider – Ferrie Franzmann Industries (known as ESS Metron) for $50 million. As a result, the latter will provide a steady infrastructure supply for Riot’s new mining machines.

Riot’s Expansion

The news was announced in a recent press release by the US Securities and Exchange Commission (SEC). The total amount of the transaction equals $50 million as the bitcoin mining firm paid $25 million in cash, funded with capital from its balance sheet. The other half consisted of up to 715,413 shares of Riot common stock.

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The mining company expects to benefit from the deal by utilizing ESS Metron’s “highly engineered electrical equipment solutions” as Riot plans to expand to 700 MW. Previously, ESS Metron helped Riot develop customized immersion-cooling technology for its 200 MW expansion project.

Jason Les – Chief Executive Officer at Riot Blockchain – described the acquisition as “another milestone in establishing” his firm as a leader in its field.

“Riot’s strategic position across the electrical supply chain is significantly enhanced as the company will benefit from ESS Metron’s existing relationships with leading electrical suppliers globally,” he added.

Stephen Howell – CEO of ESS Metron – asserted that his organization will keep providing “best-in-class service” to its growing customer base and aid Riot Blockchain in its expansion efforts.

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The American bitcoin mining company is one of the giants in its sector and is even listed on Nasdaq under the ticker symbol “RIOT.” A few months ago, it purchased Whinstone US – the owner-operator of North America’s single largest BTC mining and hosting facility.

Riot’s Previous Purchases

Earlier this year, Riot Blockchain increased its mining capacity by buying 42,000 S19 Antminers from Bitmain (a Hong Kong-based cryptocurrency mining products manufacturer).

The purchase was worth at least $138 million and was part of the firm’s plans to boost its bitcoin mining hashrate, aiming at 7.7 EH per second.

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“By nearly doubling its planned hash rate capacity, Riot continues to take great strides forward in growing both the Company’s and the United States’ share of the global network hash rate,” – said Megan Brooks, COO of Riot Blockchain.

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SEC Rejects WisdomTree’s Bitcoin ETF Proposal

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The SEC has rejected another Bitcoin ETF, reiterating its oft-repeated concerns about market manipulation.

The U.S. Securities and Exchange Commission has expectedly shot down WisdomTree’s proposal to launch a spot Bitcoin exchange-traded fund.

In its order, the SEC explains that the rejection is necessary to protect investors from “fraudulent” and “manipulative” acts.   

As reported by U.Today, VanEck’s spot Bitcoin ETF proposal was rejected as well in early November.    

According to Bloomberg Intelligence’s James Seyffart, the regulator will highly likely deny Kryptoin’s spot ETF bid as well before Christmas. 

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While the SEC has greenlit futures-based ETFs in October, the regulator is hesitant to approve an ETF that will directly track the value of the largest cryptocurrency, continuing its string of rejections that started with the application of the Winklevoss twins all the way back in 2013.

As reported by U.Today, SEC Chair Gary Gensler recently said that Bitcoin is trading on unregulated exchanges around the globe that operate outside the U.S. regulatory register, which explains why the regulator is not on board with a spot Bitcoin ETF. 

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Bitcoin network volume increases and Earth “goes to the moon” – Market Summary

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This Thursday (22) while bitcoin continues to struggle below US$57,000, altcoin Terra added more than 60% of the value in one week, resulting in a new ATH. Solana is the only one in the top 5 that has risen in 24 hours, according to CoinGoLive.

Although the month of November was characterized by high volatility, the demand for satoshis has not diminished and the volume of the Bitcoin network is increasing. Also check the Market Summary for the impact of the advancement of the omicron variant on traditional financial exchanges.

Bitcoin network volume is increasing

November was the month in which no one beat the 1.08% inflation measured by the IPC-S. Among the assets best known by Brazilians, CDI (+0.52%), BM&F gold (+0.04%), Ibovespa shares (-1.53%) and even Bitcoin, which accumulates in 30 days a drop of 6% failed to have real gains.

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In the case of Bitcoin in particular, the month of November was characterized by high volatility. However, demand for satoshis has not diminished, quite the contrary: Mempool yesterday posted the highest value since July, when China’s FUD led to market sales.

Mempool Weight – Source: @_Bitcoin_Brasil

Without much influence from the increase in demand, at the moment, the cryptocurrency leader is trading at US$ 56,552 – R$ 320,420 in the main Brazilian brokers – and its market capitalization is still well below US$ 1.1 trillion.

Dominion over the entire market is below 41%. However, the net dominance of BTC is around 72.80%.

First case of the omicron variant in the US

During this week, while waiting for a possible approval of the PEC dos Precatório in the Senate, Brazilian investors returned to worry about the advance of the omicron variant of the new coronavirus and with a new signal from the FED president, Jerome Powell, towards the withdrawal of monetary stimuli .

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Due to these fears, the Ibovespa was pulled to 100,000 points. The dollar, in turn, erased the fall and ended the day with a high of 0.59%, at R$ 5.67.

Read too: THE END OF THE REAL is near, understand why

For Brazilians, it will be interesting to defocus a little on the political agenda, to pay attention to the quarterly GDP data that will be released today by the IBGE. We reported yesterday the data from the Continuous Pnad that indicates a retreat in the unemployment rate in the third quarter.

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New York’s financial markets traded most of yesterday’s session in positive territory, but erased gains after confirming the first case of the new covid-19 variant, the omicron, in the US and closed the session on the downside.

The Dow Jones Index closed yesterday down 1.34%, the S&P 500 retreated 0.18% and the Nasdaq dropped 1.83%. The three indexes even registered gains of more than 1% at the beginning of the session.

the earth goes to the moon

Since yesterday, most altcoins have been in the red. The second-largest cryptocurrency, for example, was an inch away from hitting a new price record yesterday, but failed to reach that level, dropping 3.19% in 24 hours. In contrast, Solana and Dogecoin see slight gains.

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Terra, on the other hand, has the best performance after a double-digit jump. In addition, your native LUNA token hit a new all-time high just a few hours ago, at around $65, with a 60% increase in one week. Could it be said that the Earth went to the Moon, then?

The result of the main altcoins in the last 24 hours is as follows: Ethereum (-3.19%), Binance Coin (-3.37%), Solana (+1.99%), Cardano (-0.07%), Ripple (-2.80%), Polkadot (-4.18%), Dogecoin (+1.22%), Avalanche (-5.94%), Terra (+5.50%) and Shiba Inu (-4 .44%).

According to CoinGoLive, the market capitalization of all crypto assets is around $2.74 trillion as of this Thursday.

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Follow the crypto market news on the Cointimes Telegram group (log in) and have a great day of trading.

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