Skip to content
Home
  • Locations
    • Delaware
    • Florida
    • Maryland
    • Massachusetts
    • New Jersey
    • North Carolina
    • Pennsylvania
  • Find Crypto ATM
    • All ATMs
    • BTC
    • ETH
    • BCH
    • DASH
    • LTC
  • Buy online
  • Find Transaction
  • Blog
  • Locations
    • Delaware
    • Florida
    • Maryland
    • Massachusetts
    • New Jersey
    • North Carolina
    • Pennsylvania
  • Find Crypto ATM
    • All ATMs
    • BTC
    • ETH
    • BCH
    • DASH
    • LTC
  • Buy online
  • Find Transaction
  • Blog
spinner
Bitcoin taproot - what is BTC taproot upgrade

Breadcrumb

  1. Home
  2. Crypto Blog
  3. What is Bitcoin Taproot and how will it benefit Bitcoin?

What is Bitcoin Taproot and how will it benefit Bitcoin?

Author:
PAY DEPOT team
2021-09-01
Knowledge
News

Table of contents

  • What is Taproot (BIP 341)?
  • What is MAST?
  • How does Taproot improve on MAST?
  • Scriptless Scripts: How Bitcoin Can Support Smart Contracts without Smart Contracts
  • Taproot and Schnorr Benefits
  • How the BTC Taproot Upgrade Will Improve Technology Across Bitcoin’s Software Stack
  • Taproot Activation – Hard Fork or Soft Fork?
  • How will Taproot benefit Bitcoin?

Bitcoin's first upgrade in four years, Taproot, is slated to release in November 2021. When Taproot goes live, Bitcoin users will have increased transactional efficiency and privacy. And, what's more, this upgrade unlocks the potential of smart contracts.

Interestingly enough, Bitcoin Taproot was met with an entirely different reception than Bitcoin's 2017 upgrade—the latter is often referred to as the "last civil war" as there are staunch supporters and heavy dissidents. Taproot, on the other hand, has almost universal support among miners and Bitcoin users.

So, what is it that makes Taproot so well-accepted in the Bitcoin community? Let's find out!

What is Taproot (BIP 341)?

There are three parts to the Taproot proposal: BIP 340 (Schorr Signatures), BIP 341 (Taproot), and BIP 342 (Tapscript).

  1. BIP 340 introduces Schnorr signatures, which offer several advantages over the currently used Elliptic Curve Digital Signature Algorithm (ECDSA).
  2. BIP 341 proposes a new way of sending Bitcoin: Pay-to-Taproot (P2TR). It combines the functionality of Pay-to-Script-Hash and Pay-to-Public-Key scripts with the goal of giving users greater privacy benefits and improved flexibility.
  3. BIP 342 defines Tapscript; this is an update to Bitcoin's scripting language, and it enables Bitcoin nodes to validate P2TR inputs.

In this guide, we will largely be focusing on BIP 341. However, we will also touch on BIP 340's Schnorr signatures.

What is MAST?

Bitcoin MAST is the launching point for the upgrade's proposed improvements. MAST uses a Merkle tree (see image below) to store user-selected conditions that need to be fulfilled in order for BTC to be spent. With MAST, the spender can select which condition they'll fulfill without revealing the other conditions' details to the blockchain. By keeping unused conditions off of the blockchain, users will have increased privacy, be charged lower fees, and have the ability to create larger contracts. What's more, their Bitcoins will increase in fungibility.

Merkle Tree Example

Now, let's briefly go over conditions: Let’s say that Jill wants to send Frank 5 BTC, but she wants to set some conditions before Frank can redeem the coins. The conditions could include: (1) Frank can only spend the 5 BTC if he waits a week, or (2) if he wants to spend them before the week is over, he can only access 2 BTC, and the remaining 3 will be sent back to Jill.

How does Taproot improve on MAST?

Those conditions that we listed above – currently, they would be visible on the blockchain, resulting in decreased privacy. However, the Taproot upgrade aims to use MAST to give extra privacy for complex conditions, and this is done by hashing the potential routes. Instead of every condition being shown within the transaction information, a merklized hash will be produced. This implies two key things:

  1. A Bitcoin receiver can commit to all conditions without revealing each individual one.
  2. After the transaction execution, MAST will only reveal the successful route. The details of alternative paths will remain obscured.

Scriptless Scripts: How Bitcoin Can Support Smart Contracts without Smart Contracts

Smart contracts can be quite resource-intensive, and Bitcoin's blockchain has limited capacity. So, the two might seem like oil and water: an unnatural match. Yet, Andrew Poelstra, a mathematician at Blockstream, may have found an answer to this conundrum.

On November 5, 2017, Poelstra presented "Using Chains for What They're Good For" at the Scaling Bitcoin conference at Stanford University. In the presentation, Poelstra called attention to the potential of "scriptless scripts," which could completely remove certain smart contracts from Bitcoin's blockchain while still retaining Bitcoin's security benefits.

Flash-forward to 2022, and we can see Poelstra's research become a reality as Taproot will enable scriptless scripts. This kind of script is capable of executing smart contracts off-chain via the usage of Schnorr signatures, which we will touch on next. Scriptless scripts have 3 key benefits: functionality, privacy, and efficiency.

  1. Functionality: Scriptless scripts increase the complexity and range of smart contracts. Within the current Bitcoin Script, smart contracts' limitations come from the number of OP_CODES that the network has enabled. But, with a scriptless script, smart contracts' specification and execution are moved off the network and into a discussion that only includes the contract's participants.
  2. Privacy: Moving the smart contracts off-chain increases privacy as the details are no longer shared with the whole network. Such details would include the addresses of participants, the number of participating members, and the amounts of BTC transferred.
  3. Efficiency: Scriptless scripts lessen the amount of data that needs verification and on-chain storage. Therefore, there are lower transaction fees and fewer overheads for full nodes.

Taproot and Schnorr Benefits

The Schnorr signature scheme will be deployed as a soft fork protocol upgrade. The scheme is considered by many cryptographers to be the best in the field because:

  • It is relatively quick to verify.
  • It isn’t malleable.
  • It has a high level of accuracy due to its mathematical properties.

Schnorr employs linear math, which allows signature aggregation. Essentially, multiple signatures within the same transaction can be combined, appearing as a single signature. This makes a multisig transaction indistinguishable from a regular one—once again, bringing enhanced transactional privacy to users.

Demonstration of how Schnorr signature aggregation works

How the BTC Taproot Upgrade Will Improve Technology Across Bitcoin’s Software Stack

There are several ways in which the BTC Taproot upgrade will improve Bitcoin's technology:

  • Schnorr signatures are faster and more lightweight than ECDSA signatures; that, and their linearity, optimize Schnorr-based smart contracts for functions that ECDSA-based ones could not fulfill.
  • Taproot's tooling and coding improvements will be incredibly handy to developers, which is partly why this upgrade has been so positively received. In addition, these improvements will give Bitcoin users noticeable improvements in performance, usability, and privacy.
  • Blockstream is developing MuSig2, new software that makes multisig transactions cheaper, more efficient, and more private. Furthermore, the limit on signers for a multsig wallet is going to be raised from 15 to a higher number (although that number hasn't yet been made public).
  • Privacy protocol CoinSwap will disguise mixed coin transactions.
  • Point time lock contracts will be possible, thanks to Schnorr signatures. Lightning Network will be able to facilitate more complex smart contracts with extra privacy and boosted efficiency.
  • Schnorr signatures will also make batched validation possible, in which 1,000 Taproot signatures are validated in the time it takes 1 ECDSA signature to be validated.

Taproot Activation – Hard Fork or Soft Fork?

Hard forks typically imply an unstable period for a cryptocurrency—they are quite volatile. Thankfully, though, Taproot is going to be a soft fork. This means that its changes are compatible with the software's previous versions (with a hard fork, newer rule sets are not compatible with older rule sets).

How will Taproot benefit Bitcoin?

Taproot is going to bring Bitcoin users significant benefits, such as:

  • Increased privacy
  • Lower fees
  • More flexibility
  • Lightning boost

With everything mentioned above, Taproot is the most impactful upgrade to Bitcoin since 2017's block size increase. Making amendments to Bitcoin is difficult, and changes are typically met with lots of pushback. That's why it's such a huge deal that Taproot is supported by virtually the entire community; this shows what a big deal the upgrade is and how necessary the changes are. We've still got a couple more months until Taproot is released. Until then, stay tuned to our blog for updates! Here at Paydepot, we keep our finger on the pulse of the cryptocurrency world, and we'd love to pass our findings on to you.

Disclaimer: The information provided contains opinions of the author or editorial staff regarding investment, tax, or financial information. Such articles are provided for general informational purposes only and do not purport to provide specific legal or other professional advice. This information provided is in no way a solicitation to sell or purchase cryptocurrencies in any way. The recipient agrees that the authors, owners, and publishing agents of this article have no liability whatsoever for the material presented here, as we do not offer any brokerage or advisory information.

PAYDEPOT doesn’t give any advice or recommendations. For financial advice, contact a professional consultant.

Top posts

What is a Crypto Airdrop and how Does it Work…
How to Use a Bitcoin ATM
How to Use a Bitcoin ATM
12 Proven Ways to Make Money with Bitcoin
12 Proven Ways to Make Money with Bitcoin

Related posts

  • The collapse of FTX collapsed the entire cryptocurren…
  • What is tokenomics, how to analyze and select projects?
  • Bitcoin price forecast for July 202…
Office Address
3524 Silverside Road, Suite 35B,
Wilmington, DE 19810-4929, USA
[email protected]
Working Hours
Mon-Fri : 10am to 5pm EST
Saturday & Sunday: Closed
Support
For all Forms of Inquiries
Phone:
Email:
[email protected]
Logo Paydepot
Logo FinCen

PAY DEPOT is a U.S. Department of Treasury Registered FinCEN MSB #31000226597910.

We are fully compliant with all Bank Secrecy Act (BSA), Anti-Money Laundering  (AML), and Know Your Customer (KYC) regulations. We offer buying and selling cryptocurrency online and using BTC ATMs.

Services
Find Crypto ATM Buy Cryptocurrency Online OTC crypto trading Bitcoin Price prediction
Customer Support
Customer Support General FAQ Crypto Glossary
Download Crypto Wallet
Get it on Google Play We are working on it! Coming soon
Get it on App Store We are working on it! Coming soon
Company
About Us Partner With Us Contact Us Reviews Blog
Latest Posts
  • The collapse of FTX collapsed the entire cryptocurrency market - what happened?
    The collapse of FTX collapsed the entire cryptocurren…
  • What is tokenomics, how to analyze and select projects?
    What is tokenomics, how to analyze and select projects?
  • Bitcoin price forecast for July 2022
    Bitcoin price forecast for July 202…
Follow Us
Facebook LinkedIn Instagram Twitter Youtube Medium Pinterest
Host Bitcoin ATM
Host our ATMs BTM Benefits
Knowledge Base

How to Buy Bitcoin with Cash

How to Buy Bitcoin with Pay Depot

Can You Use A Credit Card To Purchase Cryptocurrency?

Bitcoin and Cryptocurrency Drop: Should You Buy the Dip?

Find Crypto ATM Buy Cryptocurrency Online OTC crypto trading Bitcoin Price prediction
Company
About Us Partner With Us Contact Us Reviews Blog
Host our ATMs BTM Benefits
Latest Posts
  • The collapse of FTX collapsed the entire cryptocurrency market - what happened?
    The collapse of FTX collapsed the entire cryptocurren…
  • What is tokenomics, how to analyze and select projects?
    What is tokenomics, how to analyze and select projects?
  • Bitcoin price forecast for July 2022
    Bitcoin price forecast for July 202…
Follow Us
Facebook LinkedIn Instagram Twitter Youtube Medium Pinterest
Customer Support
Customer Support General FAQ Crypto Glossary
Download Crypto Wallet
Get it on Google Play
Get it on App Store
Logo FinCen

PAY DEPOT is a U.S. Department of Treasury Registered FinCEN MSB #31000226597910.

We are fully compliant with all Bank Secrecy Act (BSA), Anti-Money Laundering  (AML), and Know Your Customer (KYC) regulations. We offer buying and selling cryptocurrency online and using BTC ATMs.

Copyright © 2022 PAY DEPOT
Trustpilot
Cookies Risk Disclosure Privacy Policy Terms & Conditions