Bitcoin is the world’s lading cryptocurrency, but it has much room for improvement. Introducing Taproot, for example, can change the ecosystem for the better. Unlocking the potential of new technologies is always an option worth exploring.
Advancing the Bitcoin Ecosystem With Taproot
Enthusiasts who have been involved in cryptocurrency for a while will know Bitcoin is unique in many different ways. Having the highest market cap doesn’t come easy, but neither does advancement of the broader ecosystem. One thing Bitcoin lacks in its current form is complex smart contract functionality. Introducing functionality has been tried before, but no project has achieved significant success to date.
When it comes to smart contracts, most people think of Ethereum or other, newer projects. Bitcoin is not something that comes to mind right away, but that situation may come to change in the future. Through the introduction of Taproot, it becomes possible to “peg” smart contracts to Bitcoin. Not only that, but this implementation can also add a minor privacy layer to smart contracts on Bitcoin’s blockchain.
This latter part is achieved by splitting the contracts into smaller bits. As a result, a more complex contract would be indistinguishable from a regular network transaction. It is a very interesting concept on paper, but making it work in real life will pose its own challenges. Various parts of the Bitcoin network will need to be upgraded, which is always somewhat controversial. Getting the community to agree on something has posed problems in the past.
What Needs to Change?
The first core aspect of integration Taproot comes in the form of Pay-to-ScriptHash, or P2SC. It is the upgrade necessary to ensure smart contract outputs and Bitcoin transaction outputs will look identical. Adding a digital signature to scripts on the Bitcoin blockchain is crucial for this upgrade to succeed, but it is not the only cog in the machine. Turning a smart contract into a digital signature – like those used by normal transactions – requires something extra.
One solution being explored is known as the Merkelized Abstract Syntax Tree, or MAST. Putting it simply, MAST allows for every property of a transaction or smart contract to be split before hashing everything. From a privacy point of view, it will allow users to “mask” specific segments until the information is ready to be revealed. A minor privacy layer, but not one that will make a major difference either.
Last but not least, Schorr Signatures are on the table as well. More specifically, an upgrade to the existing implementation of Schnorr Signatures. It is a scalable approach when smart contracts are introduced alongside regular transactions. Furthermore, it ensures a MAST transaction is identical to any normal network output. For some, this is another privacy upgrade, but it will not make that big of an impact either.
Looking at everything together, the Schnorr Signature upgrade will pose the biggest roadblock. Not because it doesn’t make sense, but because it is a fundamental change to Bitcoin’s protocol. It can certainly cause a stir equal to the SegWit upgrade. While no new network split is to be expected, the decision-making process should not be taken lightly either.
Different Taproot Implementations pop up
Introducing smart contracts to Bitcoin can be done in many different ways. Even with Taproot, there are different proposals to achieve a similar goal. Both Generalized Taproot and Graftroot are two options of how this goal may be achieved. Finding the path capable of gaining the most community and miner support will not come easy, even under the best of circumstances.
Competing solutions show there is a general interest in exploring what Taproot has to offer. How it will be implemented in the end, is difficult to predict. It is equally possible that this concept will be pushed back once again. Implementing Taproot has been on the agenda for years, without much success. There is no guarantee things will go differently all of a sudden.