Bitcoin is officially getting its first major improvement since 2017 in the form of the long-awaited Taproot upgrade. Ethereum has always dominated the conversation when it comes to "smart contracts," and most people don't know that Bitcoin is programmable in some similar ways. You can't do anything really complex with it -- you couldn't program an entire pyramid scheme with it like last year's popular Ethereum-powered scam Forsage -- but it does allow you to make simple triggers like only paying a recipient after a certain length of time has passed, or only executing a transaction if at least 3 of 5 wallet owners have agreed to it. (You can see Bitcoin's smart contracts in action every time you send a multi-signature transaction.)
Bitcoin's scripting capabilities are limited by design; Satoshi intentionally left out some key components that would otherwise have made it a full programming language. (In programmer-speak, it is NOT Turing-complete.) Primarily this was for security reasons: if you can't write a program, then your program can't have bugs. Over the years, we've seen many Ethereum and BSC projects launch to much fanfare, only to discover a fatal flaw in their smart contract programming that gets exploited by hackers. When millions of dollars are at stake, simplicity can sometimes be an advantage.
So what does Taproot actually do? Here's another area where Bitcoin differs from Ethereum at a deeply fundamental level. When a Bitcoin smart contract is created, there's an assumption that that contract is a private agreement between a few parties, and must be protected from onlookers. Taproot makes any contracts on the blockchain so compact that they become indistinguishable from a regular transaction. Basically: your Bitcoin smart contract is your business, and no one else's.
Contrast that with the Ethereum approach, where smart contracts are treated as "open-source." You can literally read through every line of code running any Ethereum smart contract ever written. (To see what that looks like, take the Forsage scam example again. You can read through the inner-workings of the pyramid scheme right on Etherscan.) From a learning standpoint, this is great because more programmers can learn how to write in Solidity (the $ETH language) by simply reading other programmers' work. From a security standpoint, it's both a blessing and a curse, because (a) it's easier to evaluate smart contracts that are currently being used, but also (b) it means private organizations can't use smart contracts to manage their internal processes. (Here's a great analysis of why making smart contracts private is hard: https://blog.nucypher.com/bringing-privacy-to-smart-contracts-is-nontrivial/)
What does Taproot mean for the average Bitcoiner? It won't have any noticeable impacts until the end of the year, and even then, it’ll initially only make a small dent on network fees. Part of the reason why it's being talked about a lot on crypto-Twitter is because the LAST time we had an upgrade of this magnitude, it triggered a civil war. Most of my readers weren't around for the Block Size War of 2017, but the question of whether Bitcoin should have smaller blocks or bigger blocks was so contentious that it caused a schism that we feel to this day. That war gave us Bitcoin Cash, and wrote the rules for how a decentralized community handles disagreements. Basically: if you don't like what Bitcoin is doing, copy it, rename it, and get the market to accept it. The end result is that we now have dozens of active Bitcoin variants, which may be "good" from a decentralization perspective but is terribly confusing for newcomers. (On the Ethereum side of the fence, Ethereum Classic $ETC is also the result of internal conflicts, from earlier that same year.)
The Taproot story, then, is about how a decentralized community handles AGREEMENTS. With the vast majority signaling that they are supportive of the Taproot upgrade, the new software can now be rolled out without any bloodshed. It'll go live in November of this year. https://bitcoinmagazine.com/.amp/technical/taproot-locks-in
Speaking of disagreements, the SEC of Thailand has reportedly banned their local exchanges from offering NFTS, meme-coins ($DOGE, $SHIB), and exchange-issued tokens ($BNB, $HT). The announcement is problematic for Binance in particular, as they not only have the world's biggest exchange token, but they also happen to be launching an NFT marketplace next week. (I'll be writing about this one at length over the next few days.) https://www.sec.or.th/TH/Pages/News_Detail.aspx?SECID=8991
There's been some chatter over the weekend about the dreaded "death cross" forming on the charts in late July. Often this is taken as a sign of more significant sell-offs to come, and the Youtube fortune tellers are all looking for a new price floor in the $20,000 range. https://www.coindesk.com/bitcoin-death-cross-bear-market The biggest bull of them all, Microstrategy, has disclosed to its shareholders that it is expecting to incur about $285 million in losses this month, which indicates that they are bracing for at least a 35% drop. https://www.forbes.com/sites/jonathanponciano/2021/06/07/bitcoins-biggest-backer-expects-285-million-loss-after-crypto-crash-but-wants-to-raise-400-million-in-debt-to-buy-more I accidentally left my crystal ball back in La Union, so I'm going to avoid contributing to these prognostications.
Ironically, Elon Musk appears to have had a positive impact on the price this morning, after tweeting that Tesla had only sold 10% of its $1.5B in Bitcoin, which improved their balance sheet by a tidy $101M. He reiterated that Tesla would again begin accepting Bitcoin as payment when the miners can confirm they’ve moved to at least 50% renewable energy usage. The newly-formed Bitcoin mining council only accounts for 10% of the entire industry, and the Chinese operators would be unlikely to ever share their numbers, so let’s just say I’m not holding my breath for this one. https://www.btctimes.com/news/tesla-to-resume-bitcoin-transactions%20
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