Engineers and developers have been working on technical improvements for Bitcoin. At this stage, the most likely is that the next bitcoin technology breakthrough will be achieved through the Schnorr+Taproot soft fork.
Better scalability, interchangeability, and scripting innovation
Bitcoin Optech contributor Steve Lee (also the head of the Square encryption team ) said that the Schnorr+Taproot soft fork brings "a whole new world, a world full of possibilities."
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Specifically, the proposal can provide greater scalability for multi-signature applications or complex smart contracts that include multiple uses of cryptocurrencies.
The Schnorr algorithm provides an easy way to create cryptographic signatures. Therefore, the efficiency of Bitcoin transaction verification can be significantly improved. Lee said that the Schnorr signature takes up 11% less space than the existing model.
The Schnorr signature is superior to the currently used elliptic curve digital signature algorithm (ECDSA). This new technology adjusts signatures and keys to help drive innovative solutions.
In addition, the Schnorr signature can be compatible with existing private keys. Therefore, with this proposal, scripts for digital currency payments do not need to be limited.
Most notably, Lee said that through the multi-signing mechanism, Schnorr signatures make key aggregation possible. That is, Schnorr allows multiple signatures to be combined on one input.
Compared with ECDSA, Schnorr signature has a significant advantage. Lee explained that in designing bitcoin, Nakamoto did not use this algorithm, probably because Schnorr was patented. Fortunately, the patent has expired.
Taproot brings interchangeability
In addition, the program will improve privacy by ensuring proper interchangeability. In this regard, Lee emphasizes that with Taproot, all the output for payment will look the same.
Taproot is a solution for signing transaction scripts that enhances interchangeability. Coinmonks' Kento U says:
"From the transaction content, the main function of Taproot is to homogenize the transaction output based on Pay-to-PubKey or Pay-to-ScriptHash (P2SH). The result will be that the details of Bitcoin transaction output are difficult to be Distinguish from the outside world."
“In a nutshell, Taproot allows Bitcoin transactions to look exactly the same on the blockchain browser and cannot be distinguished, which naturally guarantees the privacy of Bitcoin transactions.”
The proposal has entered the “ecosystem feedback” phase of the Bitcoin consensus upgrade cycle. Lee estimates that the Schnorr+Taproot soft fork proposal will enter the deployment phase in the spring of 2020.