Why is Taproot so important to Bitcoin?

Bitcoin ushered in an important soft fork upgrade Taproot. Taproot is the biggest upgrade of Bitcoin in recent years. This upgrade will not only greatly improve the privacy and efficiency of Bitcoin transactions, but also further release the potential of smart contracts.

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What is Taproot?

Taproot is a soft fork that improves Bitcoin’s scripts to increase privacy and improve upon other factors related to complex transactions. Transactions on the Bitcoin network can use various features that make them more complex, including timelock releases, multi-signature requirements, and others.

Upgrade content

The Taproot upgrade includes three independent Bitcoin Improvement Proposals (BIP): BIP340, BIP341, and BIP342. It further improves the security and privacy of the base layer, and on this basis allows more complex applications to be built.

BIP340: Replace Elliptic Curve Digital Signature Algorithm (ECDSA) with Schnorr signature.

BIP341：Merkelized Alternative Script Trees (MAST).

BIP342: Reform of Bitcoin's scripting language through 'Tapscript'.

Schnorr signature

Schnorr signatures consist of a cryptographic signature scheme developed by Claus Schnorr – a German mathematician and cryptographer. Even though Schnorr had his algorithm protected under a patent for many years, the patent officially expired in 2008. Among a number of benefits, Schnorr signatures are primarily known for their simplicity and efficiency in generating short signatures.

One of the main advantages of Schnorr signatures is that they’re able to take multiple keys inside a complex Bitcoin transaction and produce a single unique signature. This means that the signatures from the multiple parties involved in the transaction can be “aggregated” into a single Schnorr signature. This is known as signature aggregation.

Merkelized Alternative Script Trees (MAST)

Taproot uses Schnorr to create Merkelized Alternative Script Trees (MAST, a data structure that combines abstract syntax trees and Merkel trees). In the previous situation, suppose we have a transaction. The conditions for this transaction are that user A can use the transaction 30 days before the transaction is initiated, and user B can use the transaction 30 days after the transaction is initiated. In the end, no matter who uses the transaction, the information of users A and B will be exposed, which is obviously unnecessary.

In MAST, only the user who used the transaction will be exposed, while the information of another user will be hidden, which greatly protects the user's privacy.

TapScript

BIP 342 is about the specific content of Taproot script implementation. It adds some opcodes for execution and deployment of Taproot, Schnorr, soft fork and other code-level functions, such as "OP_CHECKSIGADD". Inefficient opcodes such as "OP_CHECKMULTISIG" and "OP_CHECKMULTISIGVERIFY" are disabled. Revised "OP_CHECKSIG" and "OP_CHECKSIGVERIFY" to provide Schnorr functions. The content of the Bitcoin script has been improved as a whole to adapt to the Taproot upgrade.

Closing thoughts

Taproot may be the most important upgrade in the history of Bitcoin, and it will create the purest cryptocurrency in history - the currency that utilizes cryptography to its extreme, lightest weight and most tenacious vitality. This is an opportunity to redefine Bitcoin. Whether it is a miner, a developer or a full node, it will prove that Bitcoin is still thriving.

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