While cryptocurrencies are at the boom again, one must not forget to recognize the technologies dancing behind them, such as Taproot. It is one of the most anticipated and essential upgrades coming to Bitcoin and is almost a knock away. The core objective of Taproot is to optimize the way Bitcoin’s scripts work for better efficiency, privacy, and security.
Taproot is one of the most vital updates for BTC because it will rectify what SegWit’s soft fork failed to do in the year 2017 to amplify the network’s privacy. This update will push the BTC smart contracts to work more securely to enable enhanced privacy.
Although Taproot is not coming alone to help Bitcoin become more robust. Schnorr’s signatures are also on the same boat. Also, if you have been keeping up with the cryptocurrency space, then you must know how important privacy, scalability, and security are. Since bitcoin is the most popular cryptocurrency in the market, claiming the top spot on the coinmarketcap, these three issues surrounding this coin are needed to be addressed. For that purpose, Taproot, along with Schnorr signatures, are on the way to save the day.
Taproot to the Rescue
So, what’s all the buzz around Taproot? Till now, one thing you should know is that it is going to make bitcoin more reliable. But why is there a need in the first place? It is because of the issues that bitcoin has faced in the past in terms of privacy or security.
What to Rescue?
Have you ever heard of the Mt. Gox hack (Bitcoin’s $460 Million Disaster)? No? What about the infamous Bitcoin hard fork? But there is still one big rock out there that needs to be crushed down into pieces to clear the way for bitcoins. We are talking about privacy.
Bitcoin is a public blockchain where all the transactions executed on it are visible to all the nodes/participants in the network, and that’s something that needs to be taken care of. The anonymity can be enhanced with methods like coin mixing and CoinJoins, but none of these methods make the cut to label Bitcoin as a private currency.
Let’s Jump for the Rescue
Although there is no need to worry anymore because Taproot’s upgrade is here to the rescue, it is a soft fork that intends to optimize the scripts of Bitcoin for enhanced privacy and improvement of other features such as timelock releases, multi-signature requirements, etc., that are directly responsible for the happening of the complex transactions. Taproot’s implementation will make all such multiple transactions appear similar to outsiders.
Didn’t get it? Let’s break down the technical bricks one by one.
For a moment, just assume that there is no Taproot. Now, in this kind of situation, anybody would be able to identify the transactions using complex functionalities, which requires creating multiple transactions visible to everyone. However, if the bitcoin transactions will adopt this Taproot’s update, then all the multiple transactions happening in the background would look like a single transaction creating enhanced privacy.
Taproot’s upgrade will hide all the features responsible for executing complex bitcoin transactions. To put it in a nutshell, the privacy of the transactions on the network shall be secured.
Bonus: Taproot’s upgrade can also cloak the fact that bitcoin ran the script in the first place.
What are Schnorr’s signatures?
Developed by a German mathematician – Claus Schnorr, Schnorr signatures are based on a cryptographic signature scheme, the development of which could be the inception of the next generation of signatures for Bitcoin as well as other blockchain networks.
So, what happens is that the execution of the bitcoin transactions involves multiple inputs and each of these inputs needs to have a separate signature to complete the transaction verification. But multiple signatures expose the transaction, which affects privacy.
To battle this, the next generation Schnorr signatures can help by clubbing all the multiple signatures into a single combined transaction making the transactions indistinguishable. Result? Improved Privacy.
Source: https://imgur.com/PbCUysl
How Taproot & Schnorr will benefit Bitcoin together?
The duo of Taproot’s upgrade and Schnorr’s signatures can magnet a lot of different opportunities for the benefit of the bitcoin in the following ways:
Scalability: There would be a saving of at least 30-75%on the needs of multiple signatures. Also, block validation will be 2.5x faster.
Fungibility: All the outputs would be rendered indistinguishable, which would ultimately increase privacy.
Script Optimization: The optimized scripts would help re-structure crypto signatures for better security.
Conclusion
Taproot’s upgrade shall make the transactions look similar so that the outsiders can face a tough time tracing the transaction. On the other side, Schnorr’s signature will perform the aggregation of multiple signatures belonging to multiple transactions to make a combined signature. It is not possible to segregate the combined signature and trace the transaction. Hence, the duo of the two together is like a match made in heaven to help bitcoins fight the rock and make the way to a secure highway.
Got any questions? Drop the comments below.
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