Advancing Bitcoin

Taproot explained in 10 summarised points

Leon Johnson -


The Bitcoin network recently received an upgrade called Taproot. The upgrade consisted of 3 different BIPs (Bitcoin's Improvement Proposals):

BIP 340 - Schnorr Signatures for secp256k1

BIP 341 - Taproot: SegWit version 1 spending rules

BIP 342 - Validation of Taproot Scripts

In effect there are 3 components to this upgrade: Mast, Schnorr and Taproot. In 10 bullet points below we provide a summary of the Taproot upgrade:

MAST

What is it?

  1. MAST stands for Merkelized Abstract Syntax Tree. MAST allows you to spend bitcoin without revealing all of the possible spending conditions (as is currently the situation with P2SH transactions). It uses a Merkle tree to do this: https://medium.com/interdax/what-is-taproot-and-how-will-it-benefit-bitcoin-5c8944eed8da

Schnorr

What is it?

2. Schnorr Signatures are a new and simpler way of signing bitcoin transactions

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3. The only digital signature scheme currently supported by Bitcoin is an algorithm called ECDSA (Elliptic Curve Digital Signature Algorithm). After Taproot is activated on the bitcoin network, Schnorr Signatures will also be supported.

4. ECDSA signatures used by Bitcoin (DER encoded) are 70 or 71 bytes long while Schnorr signatures are only 64 bytes.

5. Benefits of using Schnorr Signatures:

- Multiple signatures can be consolidated into a single signature, indistinguishable from others. This provides us with greater privacy.

- Schnorr signatures are provably secure (unlike ECDSA signatures).

- It is quicker to verify a Schnorr signature than an ECDSA signature.

- They take up less block space so helps with scaling.

- Schnorr signatures can do everything ECDSA signatures can but with less computation overhead.

- Adaptor signatures which enable things such as Discrete Log contracts.

- Public key aggregation provides us with some fee saving in some multisig situations.

Taproot

What is it?

6. Taproot makes smart contracts, on the bitcoin blockchain, indistinguishable from regular transactions which ultimately improves your privacy.

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7. Taproot introduces a new type of bitcoin script: pay-to-taproot (P2TR) https://github.com/bitcoin/bips/blob/master/bip-0341.mediawiki

8. P2TR addresses will still be bech32 style addresses.

9. The Taproot Upgrade introduces a new SegWit version - v1.

10. Activation date and mechanism has yet to be determined but will take place at some point in 2021.