BitPay CEO: Taproot Upgrade Gives Bitcoin Greater Flexibility — and Broader Appeal

Even bitcoin gets an upgrade from time to time.

And as upgrades go, Taproot is a game-changer, Stephen Pair, CEO of BitPay, told PYMNTS’ Karen Webster. It will spur more people — particularly developers — to utilize features and capabilities that have always been there, but have remained untapped.

Call it a case of unlocking bitcoin’s potential on a broader scale.

Granted, other recent news might give one reason to ponder that potential. Headlines usually tend to focus on price volatility — as well as an uncertain regulatory picture. Bitcoin recently touched new highs above $66,000 and then rapidly backed to below a key psychological level of $60,000. And numerous private firms such as Coinbase and Binance have debuted their own suggested frameworks for cryptos, and so has a presidential working group.

Also see: Ripple, Coinbase, Binance Share Common Objectives for Future Crypto Regulation

But, pointing to the Taproot upgrade, Pair said that anyone trying to regulate bitcoin should proceed carefully, lest they put innovation at risk. “This reminds me of the old expression that the great thing about standards is that there are so many to choose from,” he said.

But as new regulations are proposed and price volatility remains, the technical abilities of bitcoin itself are, thanks to Taproot, becoming more robust. The Taproot upgrade has the overall impact of making the marquee name in crypto safer. By extension, this might make consumers and institutions feel more comfortable about using the upgraded digital offering across a relatively broader set of use cases.

The upgrade is certainly gaining adherents. Square’s Cash App is moving forward to integrate support for the Taproot bitcoin upgrade by Dec. 1. The enhancement will give developers an expanded toolbox to work with as they continue to build on bitcoin.

Also see: Cash App to Add Bitcoin Taproot Support

Historically, bitcoin’s functionality has been “a little more limited compared to what you can do” with other cryptos such as Ethereum, Pair said. As he put it, “it’s been a little more difficult to get ‘non-standard transaction’ types into the blockchain, because the whole network doesn’t necessarily repeat them, and miners don’t necessarily include them.”

And generally speaking, smart contracts have been a bit more expensive to do via bitcoin. With bitcoin, parties pay for transactions based on their size, tied to the number of bytes that find their way into the smart contract.

One of Taproot’s innovations, said Pair, rests with MAST (an acronym that stands for marbleized abstract syntax tree), which allows developers to create larger scripts and embed larger amounts of code. But only the script that is utilized in the smart contract makes its way onto the blockchain.

“You don’t consume as much data,” said Pair, adding that “you can do more things utilizing less space and content, and hence, fewer network feeds,” which all point to greater efficiency.

Pointing to the Lightning Network in bitcoin, he said that Taproot’s privacy benefits become immediately apparent. And Schnorr signatures — the digital signatures produced by the eponymous algorithm — make it possible to assign multiple signatures to transactions. Pair said this makes all manner of transactions the size of “normal” bitcoin transactions — requiring less complexity to get to the desired functionality.

Moving to Mainstream

Pair predicted that bitcoin would continue to gain traction in digital wallets in unexpected ways, along with that reduced complexity.

The scripting capability inherent with bitcoin makes it possible for holders to, say, leave bitcoin directly to their heirs when they die, or pay for an item automatically with bitcoin as they move from place to place. And such transactions, of course, will bring bitcoin more into the mainstream.

As a recent example, Pair pointed to BitPay’s announcement that it would partner with Verifone to enable crypto acceptance on terminals and in-app, saying this will help expand the ecosystem.

As he told Webster, “we’re looking forward to people having the opportunity to experience a crypto payment in person,” and stated that the ability to transact for low dollar amounts could remove any intimidation factor. (On the other side of the spectrum, auction house Sotheby’s has said it would accept bitcoin and Ethereum as means of payment.)

With Taproot in place, Pair predicted, “with the publicity and the attention and the experimentation that’s going to happen, there’ll be more people doing more interesting things with bitcoin.”