An Explanation of Taproot: Consisting of Three Different Bitcoin Improvement Proposals

Taproot: A Summary of Three Bitcoin Improvement Proposals

Cryptocurrency KOL Trust Machines has interpreted the Bitcoin Taproot upgrade, which consists of three different Bitcoin Improvement Proposals (BIP 340, BIP 341, and BIP 342). These improvements enhance efficiency, provide better privacy, and eliminate script size limitations.

Taproot was launched in 2021, but only recently became a focus of attention, largely due to its association with Ordinals. While Taproot is most commonly associated with Ordinals, it was never intended for that use case. In fact, Taproot is composed of three different Bitcoin improvement proposals: BIP 340, BIP 341, and BIP 342.

1) BIP 340: Schnorr signatures. To send Bitcoin to someone, some form of digital signature must be used to verify that you own those Bitcoin. Bitcoin has traditionally used a signature method called ECDSA, but this BIP unlocks Schnorr signatures as a more secure alternative. Schnorr signatures have been proven to be secure and bring additional theoretical security to Bitcoin transactions using Taproot. Schnorr signatures also support key and signature aggregation, enabling more efficient and private multi-signature setups.

2) BIP 341: Taproot. This BIP includes two key features: Merkelized Trees, where the Merkle branch only records the result of script execution on the blockchain, rather than recording all possible ways the script could be executed. This greatly reduces the space occupied by transactions, especially more complex ones; P2TR, which merges the two previous scripts: Pay-to-Public-Key (P2PK) and Pay-to-Script-Hash (P2SH). Bitcoin transactions sent using private keys or Bitcoin scripts such as multi-signature setups are now indistinguishable from each other, thus achieving better privacy.

3) BIP 342: Tapscript. BIP 342 modifies Bitcoin’s scripting language to be able to read Schnorr signatures. It essentially allows Bitcoin’s scripting system to be compatible with all the new updates in BIP 341 and BIP 340. BIP 342 introduces a new opcode, OP_SUCCESS, eliminating the 10,000-byte script size limit. Scripts are now only limited to 1vMB block size, equivalent to a size of approximately 4MB.

Reference: https://twitter.com/trustmachinesco/status/1678773466005381128

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