Anyone familiar with the cryptocurrency community knows that privacy, scalability, and security are major concerns. While Bitcoin is the most popular cryptocurrency in the world, these issues still need to be addressed. Taproot aims to do just that.
The Taproot upgrade has been widely anticipated as a major first step toward solving Bitcoin's lack of privacy and other related concerns. But what is Taproot, and how will it benefit Bitcoin? Let's dive in.
What is Taproot?
In fact, Taproot makes it possible to hide the fact that a Bitcoin script ran at all. For example, spending Bitcoin using Taproot could make a transaction in a Lightning Network channel, a peer-to-peer transaction, or a sophisticated smart contract become indistinguishable. Anyone monitoring one of these transactions would see nothing but a peer-to-peer transaction. It's worth noting, though, that this doesn't change the fact that the wallets of the initial sender and final recipient will be exposed.
The Taproot proposal was first unveiled by Bitcoin Core developer Greg Maxwell in January 2018. As of October 2020, Taproot has been merged to the Bitcoin Core library after a pull request created by Pieter Wuille. For the upgrade to be fully deployed, node operators must adopt Taproot’s new consensus rules. Depending on how this unfolds, the activation could take months.
Taproot is expected to be implemented along with another upgrade called Schnorr signatures. This not only makes Taproot's implementation possible but also enables a much-anticipated feature called signature aggregation.
What are Schnorr signatures?
However, the development of the Schnorr Digital Signature Scheme (SDSS) may be the starting point of a new generation of signatures for Bitcoin and other blockchain networks.
One of the main advantages of Schnorr signatures is that they’re able to take multiple keys inside a complex Bitcoin transaction and produce a single unique signature. This means that the signatures from the multiple parties involved in the transaction can be “aggregated” into a single Schnorr signature. This is known as signature aggregation.
How will Taproot benefit Bitcoin?
As we’ve already discussed, Taproot will bring major improvements to Bitcoin’s privacy. When combined with Schnorr signatures, Taproot may also boost efficiency when performing transactions. Besides enhanced privacy, other potential benefits include:
- Reduced amount of data to be transferred and stored on the blockchain.
- More transactions per block (higher TPS rate).
- Lower transaction fees.
Taproot is a highly anticipated and widely supported upgrade to Bitcoin. If it gets implemented along with Schnorr signatures, we will see significant improvements in terms of privacy, scalability, security, and more. These upgrades can also generate more interest around the Lightning Network and encourage multisig to be more of an industry standard.
Regardless of your involvement in the Bitcoin community, the added benefits of improved privacy, efficiency, and security will likely impact your experience using Bitcoin.