BITCOIN PRIVACY WILL BE PROVIDED BY TAPROOT, BUT THERE IS A CATCH

Bitcoin privacy is pretty terrible. What more can be said when anyone in the world can find and examine any transaction using a web browser?

While this problem is relevant, developers have long been trying to find a solution or at least improve the situation. One of the most famous Bitcoin developers, Greg Maxwell, caused some excitement in the crypto community by proposing something called Taproot back in January.

The idea of Taproot, while still far from providing complete Bitcoin privacy, offers a way to make all transactions on the blockchain identical to the outside eye. However, whispers about this proposal have been somewhat obscured by other projects and the fall in the price of Bitcoin.

However, there are those who have not forgotten about this proposal. Mathematician Andrew Poelstra put together a mathematical proof of security in April, while Xapo engineer and Bitcoin Core developer Anthony Towns floated the idea of potentially reducing Taproot's data usage in July.

The ongoing work demonstrates that many believe that Taproot will be the breakthrough that will provide a privacy breakthrough for Bitcoin. Moreover, this is not actually a difficult change for Bitcoin. The test code has already been implemented, proving in practice the validity of Maxwell's theory. 

"Taproot is fairly simple and can be implemented right away," Townes told CoinsDesk.

But there is a problem, and it's a big one - Taproot depends on technologies that don't exist yet. Townes explained: "Without Schnorr, Taproot won't get you to your final destination."

Missing element

Taproot will hide the fact that special payments occur through Bitcoin. There are many complex transactions (better known as smart contracts) used in Bitcoin, such as the blockchain-free Lightning protocol to enable faster and more scalable Bitcoin payments and other more complex types of transactions that are still in development.

But all Bitcoin transactions are public and it becomes obvious when someone uses one of these transactions. Taproot will put an end to this by making these transactions just like all other "boring payments" as Maxwell described in his technology announcement.

However, this cannot be done without Schnorr - an update to the Bitcoin signature scheme that has been in development for many years.. It is expected that the new signature scheme will be better than the current one in all respects, which will allow Taproot to work because... will allow you to combine all signatures into one.

"Schnorr is necessary because without it we can't combine multiple keys into one key," Pieter Wuille said in his talk. Will recently published a (very) technical proposal detailing how Schnorr could be added to Bitcoin, finally moving forward with Schnorr as the next big change for Bitcoin.

But since Schnorr's development has already taken many years, developers have long dreamed of what they can build on top of this technology once it's fully launched. Towns said Schnorr is a "very exciting" change, but Taproot is "the icing on the cake."

The developers have been thinking about other improvements for a long time, including those made possible by Schnorr, although it's worth noting that Taproot isn't the only major change being considered by the community. Towns believes privacy improvements could be included in other updates. "I'm convinced that Taproot, Schnorr, Graftroot are a package that should work together," he said, referring to another technology Maxwell proposed. Townes also believes that other long-awaited changes will be implemented at the same time, including MAST, a proposal to speed up smart contracts in Bitcoin, and SIGHASH_NOINPUT, a change that could help create a more reliable Lightning network, which analysts say could bring Bitcoin to the masses. Although these technologies have different names and were proposed at different times, Townes talks about them as a single entity.

What's next?

There are so many changes planned that developers are confused about what should be done first.

Will explained in his speech why this is not such a simple solution. There is little justification for deploying all of these features simultaneously. Each deployment of a new "consensus change" requires a new addressing format.

Since the addresses are different from the old ones, it immediately becomes obvious who is using the new functionality, especially since not every user will start using the new functions on the day they are launched.. This will take time, just as past changes took time to be widely adopted. And this poses a small blow to privacy. But doing this more than once would be even worse.

On the other hand, deploying all these changes together would create a mess.

Speaking of other changes, there is also something called “signature aggregation”. The most hyped application of Schnorr, which could help scale Bitcoin even further. But since it is so complex and needs further discussion and revision, this is one of the changes that the developers believe should be added to Bitcoin later.

In fact, Will is focused on the proposal to deploy Schnorr and Taproot together in part because he thinks Taproot's privacy addition is so exciting and important that he calls it a "huge win" for smart contracts in Bitcoin.

As for Schnorr, Townes noted that the developers are still working out some pitfalls, such as the hardware attacks discovered by Maxwell. Developers are slow to set development timeframes as updates often take longer than expected. And Schnorr is no different in this regard.

Poelstra hopes it can be rolled out by the end of the year, giving Bitcoin users the opportunity to decide whether to accept it or not. But it all depends on whether the developers can take the path of change and development.

As Townes puts it: "You can't formulate a proposal until you understand what it should focus on. The only real delay is finalizing what goes into it."

According to CoinDesk