Taproot is the most significant upgrade of the Bitcoin network till date. What is Bitcoin Taproot and what impact is it expected to have on the Bitcoin network?
Bitcoin can be described as the most significant invention since the day the internet was invented. The strength of the invention which is its decentralization can also be referred to as its weakness. This is mainly because the contributing entities are largely independent, so reaching a consensus for alteration or change of protocol is rare.
Shortcomings of Bitcoin
The last upgrade of the Bitcoin network is the Segregated Witness (SegWit) which resulted in the hard fork that created Bitcoin Cash. Since then, the shortcomings of Bitcoin such as privacy and scalability have been issues that limited the growth and adoption of the digital currency.
Challenges such as network clogs and high transaction fees are reasons for concern to many users because these limit the use of Bitcoin as a means of exchange and transfer of value.
Bitcoin Improvement Protocols
Then came the Taproot upgrade with its purpose to address those limiting factors in the use of Bitcoin. Taproot comprises three Bitcoin Improvement Protocols (BIPs) with the objective of enhancing the scalability, security and privacy of the Bitcoin network.
The first BIP deals with the cryptography of Bitcoin core which is based on the Elliptic Curve Digital Signature (ECDS). In Taproot, Schnorr digital signature, which is a more secure and lightweight scheme, is integrated in BTC core cryptography and made to run in tandem with ECDS.
The second BIP known as Taproot focuses on improving SegWit with focus on privacy, lower transaction fees and the enhancement of scaling components such as the Lightning Network (LN).
The third BIP is known as Tapscript and worked on the Bitcoin script to make it amenable to Schnorr/Taproot transactions. The essence is to make future upgrades on the Bitcoin network easier. Tapscript was accomplished through a reformed version of the Bitcoin script capable of supporting schnorr/taproot transactions.
Taproot is the most impressive upgrade on the Bitcoin network. This improvement allows single signature, multi signature and smart contracts on the Bitcoin network. Making these transactions (single-sig, multi-sig and complex smart contracts) to look similar is a remarkable improvement on the Bitcoin blockchain.
The implication of these improvements is that they practically enhance Bitcoin utility and make massive adoption of the cryptocurrency a reality. Think of Taproot as introducing features that make Bitcoin secure, private and scalable.
With Schnorr linearity, the transaction time of BTC is shortened due to faster speed of verification of these transactions. This is accomplished through the modification of opcode in Tapscript that enables transaction verification to be done in batches instead of individually.
Consequently, fewer opcodes are also required in multi-sig transactions. The increased block space that this affords the Bitcoin network will result in more transactions per second. The decrease in network congestion means that users will pay less fees while using Bitcoin.
Schnorr is Backward Compatible
Users of schnorr wouldn’t encounter compatibility issues because there is no need for standardization since it is compatible with the ECDSA private keys. The developers ensured this since it is not convenient for any Bitcoin upgrade to entail significant changes on the part of users and exchanges. If this feature were not taken care of in Taproot, the inconvenience on the use of Bitcoin would be apparent since the user would need to know the software compatibility of their wallet with that of the counter-party.