What is the Bitcoin Taproot upgrade?
Image Source: Getty Images  Contrary to popular belief, Bitcoin is not a finished product. Its actually a working prototype. Because this blockchain network is still being refined, there was recently confirmation of an upgrade called Taproot. Heres everything you need to know about how this could improve the network and what it means for the cryptocurrency. Compare stocks and shares ISAs If youre planning to open a stocks and shares ISA, choosing the right platform is important. To help you narrow down the choices, weve created a list of some of the top stocks and shares ISAs. The Bitcoin network is continually developing. A major goal of the cryptocurrency is to become a perfect form of money. However, perfection is a tall order. So from time to time, upgrades like Taproot are put into the coding to try and improve things like:  Security  Transaction speeds  Privacy  Efficiency  Scalability  Thats a lot of broad buzzwords, I know. But how Bitcoin works is quite complex and its an ongoing global collaborative project. This is the first major upgrade in around four years. The main goals are to improve transaction privacy and network efficiency. Another major improvement is the potential to implement smart contracts onto the Bitcoin blockchain. Smart contracts are already available on the rival Ethereum network. It basically means that two parties or organisations can work together securely without needing middlemen. Potentially, it could save people and companies a lot of money in the future. This also opens the door for Bitcoin to be used for DeFi (decentralised finance). This involves building an alternative financial infrastructure on the blockchain that is more open and transparent than the current system. Improving the network can sometimes be difficult because its decentralised and no one controls it. This means that in order to make things better or do some tinkering, approval is needed by the majority of people active in the network. This includes miners, developers, users, nodes, and businesses. Unless there is approval across the board, changes cant be made. Imagine how hard it is trying to get a bunch of strangers to all decide on the same thing! These all-too-common investing errors can cause you to miss out on the long-term wealth-building power that shares can hold. To help you side-step these pitfalls, and move forward on your path to wealth-building, weve created a free report, The 3 Worst Mistakes New Investors Make. Just enter you best email below for instant access to your free copy. Click here! If everything goes according to plan, the upgrade should take place in November 2021. This is still a good few months away, and a lot can change in the cryptocurrency world in that time. So although this date is pencilled in, its not exactly set in stone. The last upgrade, in 2017, was very divisive within the Bitcoin community. The Taproot update seems to have more universal support. This means it should go quite smoothly. Well have to wait and see. Okay, so now that all the boring tech stuff is over, lets take a look at how all of this could impact things for investors. Right now, this upgrade doesnt really change much. It promises to deliver a better Bitcoin further down the line. The idea is that it will allow more practical uses and generally just make it a bit more competitive with other cryptocurrencies. This may potentially attract more investors and drive up the price. On the other hand, it might not create the buzz and interest needed for more buying. This is because its only making Bitcoin as useful as some other types of cryptocurrency already on the market. Investing in Cryptocurrency is extremely high risk and complex. The Motley Fool has provided this article for the sole purpose of education and not to help you decide whether or not to invest in Cryptocurrency. Should you decide to invest in Cryptocurrency or make any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose. Get a free initial review lasting up to 1 hour, plus 50 off any follow-up advice. MyWalletHero has sourced you a 50 discount off the cost of advice when you find an independent or whole-of-market financial adviser through Unbiased.co.uk*. All advisers are FCA-regulated, qualified and give fully unbiased advice. To find yourself an adviser fast and for free  use the Unbiased matching tool. Find an adviser now! *This is an offer from one of our affiliate partners. For more information on why and how we work with partners, click here.