what is Bitcoin Taproot ?
Bitcoin Taproot
Taproot is an upgrade proposal for Bitcoin that brings several new features and benefits to Bitcoin users. The Bitcoin community hopes to enable taproot in the near future, although the path to activation is still unclear. The date of implementation of this upgrade and its benefits for Bitcoin are discussed below.
Bitcoin Taproot
What is Taproot?
Taproot upgrade actually consists of three Bitcoin upgrades proposals (BIPs) that defines three separate upgrades such as Schnorr, Taproot and Tapscript signatures.
However, these three upgrades are known as taproot upgrades, and 340, 341, and 342 upgrade proposals are often referred to collectively as Taproot upgrades. Together, these upgrades introduce new, more efficient, more flexible and private ways to transfer Bitcoins. Before we get into what Bitcoin Root Tap is, let us look at a few previous Bitcoin upgrades.
Significant Bitcoin upgrades ever
Taproot is not the first Bitcoin network upgrade. However, have previous big upgrades to the Bitcoin network had a big impact? What can we learn from what happened?
Bitcoin TX (2014)
Mike Hearn and Gavin Anderson, both of whom were senior developers at the Bitcoin Foundation, proposed the first large Bitcoin Fork in 2014.
The goal of Bitcoin TX was to speed up transactions from 7 to 24 transactions per second by increasing the block size from 1 to 8 MB. The downside of this change was that the amount of memory required to record total blockchain records at different nodes was significantly increased.
In a message to the Bitcoin developers, Hearn said:
“I’m sad that we got here, but there is no other way. The blind Bitcoin project has moved away from the principles that many others and I feel are important. Unfortunately, creating a fork is the only solution to the problems.”
Support for Bitcoin Exit declined after a short time and the coin was eventually abandoned after failing to garner massive support. Yet, the story did not end there…
SegWit (2017)
Upgrading a Bitcoin network is a long and tedious process. Upgrading the SegWit consensus layer was first proposed by Bitcoin developer Core Peter Will in 2015 and implemented in August 2017. Segway, meaning witness segregation (transaction signing), was implemented primarily to optimize Bitcoin transactions. In this upgrade, each transaction is divided into two parts, as a result, the number of transactions in a block increases and finally the capacity of the whole network increases.
Segway’s opponents did not fall short of these conveniences. Subsequent conflicts became known as the Bitcoin Civil War, which led to the Bitcoin blockchain hard fork and the creation of a Bitcoin cache.
The main difference between Bitcoin and Bitcoin Cash is the increase in Bitcoin cache block size from 1 megabyte to 8 megabytes, which allows more transactions to be included in each block, and ultimately allows coins to be scalable.
In 2018, the maximum block size increased again to 32 MB, although the actual size remains much smaller. The market value of Bitcoin cache at the time of writing (mid-fall 1400) is about $ 2.13 billion, compared to about $ 26.1 trillion for Bitcoin.
How Bitcoin taproot works?
Taproot upgrade proposal was published in January 2018 by Bitcoin Core developer Greg Maxwell, and three years later, on June 12, 2021, the threshold of 90% of the extracted blocks was met with a miner support signal.
This means that the 1815 blocks from 2016 extracted in the two-week period contained information encrypted by the miners, indicating their support for the upgrade. This voting mechanism was called Speed Trail.
As mentioned, in January 2018, Gregory Maxwell, the developer of Blind Bitcoin, submitted a proposal designed to upgrade the Bitcoin network with interchangeable privacy scripting.
Maxwell introduced a plan that included a number of cryptographic tools to significantly increase the privacy of Bitcoin users. The proposal called “Taproot: Interchangeable Privacy Scripting”.
In January 2020, a blind Bitcoin developer named Peter Will filed a solicitation request for the official addition of a taproot upgrade to the Bitcoin Blind Library. The money request was merged with the blind Bitcoin code in October 2020.
Although Taproot is often seen as an upgrade, it actually consists of three different Bitcoin or BIP upgrade proposals. Three upgrades must be combined to achieve the goals described by Maxwell. These three BIPs are known as BIPs 340, 341, and 342, and called Signature, Taproot, and Tapscript, respectively.
These three BIPs are now collectively called TIP Routes. This update is to be implemented as a soft fork after the miners’ support is announced.
Taproot upgrade is designed to improve scripting on the Bitcoin network in order to achieve greater performance. This upgrade is especially related to privacy, security and efficient use of space.
To better understand how Taproot does this, read the following section, which introduces the three BIPs and how they work.
Bitcoin Taproot
Upgrade 340 proposal
BIP340 proposes the introduction of floating signatures for Bitcoin blockchain. Schnorr’s signatures are a cryptographic scheme first described by a German mathematician named Klaus Schnorr.
This design creates a short and efficient digital signature after using it and at the same time has a high level of security. Although this design may seem simple compared to other encrypted designs, it has long been considered one of the most secure designs. Simply put, Schnorr signatures are very secure and can resist long-term attacks.
What are Schnorr Signatures?
These signatures include an encrypted signature design created by Klaus Schnorr. Although Schnorr protected its algorithm under patent law, it expired in 2008. Angular signatures have several advantages, the most famous of which is the simplicity and efficiency in creating short signatures.
The signature design chosen by Satoshi Nakamoto (creator of Bitcoin) was the Ellipse Curve Digital Signature Algorithm (ECDSA). The design chosen instead of the signature algorithm was since the design was widely used at the time, well understood, secure, compact, and open source.
However, the development of the Sloan Digital Sky Survey (SDSS) may be the starting point for a new generation of signatures for Bitcoin and other blockchain networks.
Another major advantage of float signatures is that they can generate a unique signature based on multiple keys in a complex Bitcoin transaction. This means that the signatures of several parties involved in the transaction can be “aggregated” into one float signature. This feature is known as signature aggregation.
Upgrade 341 proposal
BIP341 deals with how to integrate float signatures in the Bitcoin network. This BIP is called Taproot. Taproot describes the need for a Bitcoin script to be updated to evaluate and integrate float signatures. This is done using Merkelized Alternative Script Tree (MAST).
Merkel trees are a type of data structure that contains a parent hash and other related data in a structure that is somewhat similar to a tree. The main advantage of this structure is that it securely validates data in large pools.
The MASTs use Merkel trees that allow multiple scripts to be locked out. BIP 341 also provides a new way to spend Bitcoins through a new type of script.
In a type of script called pay-per-root (P2TR) script, users can pay for the public key or Merkel root of other scripts. With TPTR payment script (P2TR), the currency code balance can be unlocked and spent in one of the following two scenarios:
- by private key owner
- Any party that can meet the requirements of each script in the Merkel tree in accordance with the function of collecting the key of floating signatures.
The float key aggregation feature works like this: If a user uses BIP 341 and sends Bitcoin to a pay-per-tap (P2TR) script, a public key is generated. Let us call this key S. But this public key S is a combination of the public key of the sender, for example P, and the public key of Merkel’s root, for example M.
Therefore, any script in the Merkel tree can consume output.
BIP 341 allows users to choose between simple P2PK and PTTR scripts when spending, so that all taproot outputs look like simple outputs. This feature is enabled by the float design key aggregation feature and is supported by MAST.
Upgrade 342 proposal
BIP342 is called Tapscript. As the name implies, BIP 342 is associated with updating and adding operational codes that can verify the cost of taproot and float signatures. Although the taproot update is integrated into the code, it is not clear when this upgrade will run on the network. It depends on the approval of the miners.
What are the benefits of Bitcoin taprooting?
After discussing what Bitcoin taprooting is, it is not bad to look at the Advantages of this upgrade:
More strength
Mathematically, sand signatures are safer than ECDSA (Ellipse Curve Digital Signature Algorithms) signatures as they are proven safe using fewer assumptions.
In addition, the nature of floating signatures eliminates the possibility of signature variability and the theory of subsequent double spending, which is a theoretical problem in the Ellipse Curve Digital Signature Algorithm (ECDSA).
Although Segway has dealt with this issue well, this problem is still theoretically a challenge due to the use of the Ellipse Curve Digital Signature Algorithm (ECDSA). The float design solves this problem.
Efficient use of space
Most Bitcoin Root P2TR outputs take up less space in the blockchain than regular P2PKH outputs. However, with these outputs, they are slightly larger than the Segway outputs.
Using these outputs in the long run is likely to make the space in the blockchain more efficient. Float keys and signatures are also smaller than their counterparts are which makes this advantage even more striking.
In other words, with more efficient use of block space, Bitcoin blockchain should have higher throughput, which leads to faster transactions.
Lower transaction fees for complex transactions
Due to the function of key aggregation, the size of transaction data related to complex Bitcoin transactions is significantly reduced. In this case, only one key is generated, which leads to a significant reduction in the fee for complex transactions. Multi-signature transactions and time-lock wallets are complex costs.
Another benefit of signatures and floating keys is the cost savings. The length of the signatures takes up less space due to their small size, resulting in less cost.
Increase privacy
Despite the taproot, all outputs, whether simple or complex, look the same; Just looking at the blockchain does not determine the type of transaction — whether smart contract, multi-signature output, Lightning network transaction or single-signature output.
When using Taproot, all of these complex transactions look like a simple single-signature output, and once the transaction is confirmed, not all possible scripts that can be used to unlock the output can be viewed. This is arguably the most important and unpredictable part of this upgrade, as it renders most of the tools and forms of blockchain analysis useless. This feature significantly increases the privacy of the Bitcoin network.
Better scripting performance
Taproot has more capabilities in the field of complex scripting. This upgrade allows Bitcoin to be locked on multiple scripts. By combining these and other Taproot benefits, developers can create wallets or other features with better performance on the Bitcoin network platform.
One of these is the creation of time lock wallets with multiple recovery conditions. In the current situation, the user’s Bitcoin balance may be permanently lost if all conditions are not met. However, with the help of Taproot, it is possible to design a multi-signature wallet with conditions that are consistent with the complexity of real life and greatly reduce the possibility of losing access to Bitcoin.
For example, if a person wants to give Bitcoins to his four children at the time of death, he can make a 4 out of 6 multi-signature wallet, which can be changed to a 2 out of 5 wallet if certain conditions are met.
In other words, instead of requiring four out of every six family members to sign a transaction, the multi-signature wallet changes so that only two family members are required to sign a transaction for their children’s payments.
What is the execution date of Bitcoin Taproot?
The digital currency community, and especially Bitcoin, has waited more than four years for another upgrade in the Bitcoin network. These days, we are slowly approaching the execution date of Bitcoin. Regarding the date of Taproot, we should mention that according to Nick Hash website, the last upgrade of Bitcoin network or Taproot would take place on November 2022.
Does Taproot affect the price of Bitcoin?
Privacy has long been a challenge for Bitcoin since it is a threat to censorship, which is arguably Bitcoin’s strongest feature.
Given the many benefits of Taproot for the Bitcoin network, especially the implications of privacy, the price of Bitcoin may respond positively to the implementation of the upgrade.
The value of this digital currency may increase dramatically in the long run as Bitcoin developers implement the necessary privacy solutions for the network to ensure that Bitcoin remains resistant to censorship.
Describes the use of float signatures for the Bitcoin network. This explains how public keys and signatures created using the float signature scheme should be encrypted. This saves space for the blockchain compared to signatures based on the ECDSA.
Shnorr signatures also support aggregation, meaning they can generate a unique signature by merging multiple keys into one complex Bitcoin transaction. Key signing or aggregation is undoubtedly the most important advantage of this particular improvement proposal.
