Along with the Schnorr signature, Taproot is one of the most anticipated technological upgrades to Bitcoin since SegWit was introduced. Taproot’s goal is to change the way Bitcoin’s scripts work to improve privacy, scalability, and security. This and more will be accomplished by combining Taproot with a related upgrade known as Schnorr signatures.
Anyone familiar with the crypto community knows that privacy, scalability, and security are major concerns. Although Bitcoin is the most popular cryptocurrency in the world, these issues still need to be addressed. Taproot was born with the purpose of doing just that.
Bitcoin has had its ups and downs along the way, but it has proven to be the anchor that keeps the crypto space afloat. Regardless of the issues that have arisen over the years, like the Mt.Gox hack or the infamous Bitcoin hard forks, the crypto community is still on Bitcoin’s side.
But there are certain issues that cannot be ignored, one of the biggest being privacy. With Bitcoin being a public blockchain, anyone can track the transactions that happen on the network. For some, that’s a big concern.
Users can increase their anonymity through techniques such as coin mixing and CoinJoins. Unfortunately, however, none of these make Bitcoin a privacy currency. While Taproot doesn’t quite do it, it can help increase anonymity on the network.
The Taproot upgrade has been widely anticipated as an important first step towards addressing Bitcoin’s lack of privacy and other related concerns. But what is Taproot and how will it benefit Bitcoin?
What is Taproot?
Taproot is a soft fork that improves Bitcoin’s scripts to increase privacy and improve other factors involved in complex transactions. Transactions on the Bitcoin network can use different features that make them more complex, like time-locked releases, multi-signature requirements, and others.
Without Taproot, anyone can detect transactions using that complex functionality, which requires creating many transactions. However, the Taproot upgrade will help “hide” all the moving parts of a Bitcoin transaction including these features. So even if a transaction applies that feature, they will be the same as a single transaction. This is seen as a big win for Bitcoin privacy advocates.
In fact, Taproot can mask an already running Bitcoin script. For example, spending Bitcoin with Taproot can make Lightning Network channel transactions, peer-to-peer transactions, or complex smart contracts indistinguishable. Anyone monitoring one of these transactions will see nothing but a peer-to-peer transaction. However, it should be noted that this does not change the fact that the wallets of the first sender and the last recipient will be exposed.
The Taproot proposal was first announced by Bitcoin Core developer Greg Maxwell in January 2018. As of October 2020, Taproot is incorporated into the Bitcoin Core library following a pull request created by Pieter Wuille. For the upgrade to be fully implemented, node operators must apply Taproot’s new consensus rule. Depending on how this goes, activation can take months.
Taproot is expected to be implemented along with another upgrade called Schnorr signature. This not only makes the Taproot implementation possible, but also enables a feature many have come to expect, called signature aggregation.
What is a Schnorr signature?
The Schnorr signature consists of a cryptographic signature scheme developed by the German mathematician and cryptographer Claus Schnorr. Although Schnorr has protected his algorithm by patent for many years, the patent officially expired in 2008. Among the many benefits, Schnorr signatures are mainly known for their simplicity and efficiency. effective in generating short signatures.
The signature scheme adopted by Satoshi Nakamoto (the creator of Bitcoin) is the Elliptic Curve Digital Signature Algorithm (ECDSA). The choice of ECDSA over the Schnorr signature algorithm is because it is widely used, well understood, secure, compact, and open source.
However, the development of the Schnorr Digital Signature Scheme (SDSS) could 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 can take multiple keys inside a complex Bitcoin transaction and generate a unique signature. This means that signatures from multiple parties to a transaction can be “aggregated” into a single Schnorr signature. This is called a signature set.
Taproot will bring benefits what for Bitcoin?
As we discussed, Taproot will bring major improvements to Bitcoin privacy. Combined with Schnorr signatures, Taproot can also increase efficiency when executing transactions. Besides improved privacy, other potential benefits include:
- Reduce the amount of data transferred and stored on the blockchain.
- More transactions per block (higher TPS rate).
- Lower transaction fees.
Another benefit that Taproot brings is that the signature will no longer be “flexible”. This is a known security risk in the Bitcoin network. Simply put, signature malleability means that it is technically possible to change the signature of a transaction before it is confirmed. This way the attack will make it appear as if the transaction never happened. Accordingly, Bitcoin faces the infamous double-spending problem, which can damage the integrity of the distributed ledger.
Taproot is a highly anticipated and widely supported upgrade to Bitcoin. If it is implemented with Schnorr signatures, we will see significant improvements in privacy, scalability, security and more. These upgrades could also generate more interest in the Lightning Network and encourage multi-signatures to become the industry standard.
At the same time, the added benefits of improved privacy, efficiency, and security will likely affect the user experience when using Bitcoin.
According to Academy Binance
Follow the Twitter page | Subscribe to Telegram channel | Follow the Facebook page