1. Blog
  2. Crypto News
  3. What is Bitcoin Taproot? Detailed info about Bitcoin Taproot

What is Bitcoin Taproot? Detailed info about Bitcoin Taproot

  1. 1. What is Bitcoin Taproot?
  2. 2. The birth of Bitcoin Taproot
  3. 2.1 Motivations for upgrading BTC Taproot
  4. 2.2 History of Taproot
  5. 3. Terminology that BTC Taproot players need to understand
  6. 4. The most accurate information on Bitcoin Taproot
  7. 4.1 BIP-340 (Schnorr Signature)
  8. 4.2 BIP 341 (Taproot)
  9. 4.3 BIP-342 (Tapscript)
  10. 4.4 Ability to build smart contracts
  11. 5. How are smart contracts important to Bitcoin?
  12. 6. Projections
  13. 7. What benefit will Taproot bring to Bitcoin?
  14. 7.1 Saving Space
  15. 7.2 Privacy – anonymity
  16. 7.3 Security Upgrade
  17. 8. FAQs on Taproot
  18. 8.1 When to activate Taproot?
  19. 8.2 Why is the Taproot upgrade necessary?

What is Bitcoin Taproot? With the outburst of Blockchain in recent times, it has created a fever for Bitcoin with the news of the Taproot upgrade. But how does this upgrade differ from the previous one, and how does it affect the price of Bitcoin? This article will answer all those questions.

1. What is Bitcoin Taproot?

Bitcoin Taproot is an updated version of the soft fork with 3 main parts, including BIP-340, BIP-341, and BIP-342 with the aim of bringing more optimization to users, such as security, efficiency, scalability, privacy, and many aspects of complex transactions.

To be able to launch this upgraded version, the community is one of the core elements that make up Taproot. The condition to pass this update from the Bitcoin network accounted for 80% of the total votes, but Taproot made a significant turning point by winning over 90% of the total votes for this upgrade.

2. The birth of Bitcoin Taproot

So what is the reason behind the birth of Bitcoin Taproot?

2.1 Motivations for upgrading BTC Taproot

In the world of Technology in general & Crypto in particular, modern innovations are changing daily. Large corporations or organizations are forced to change to adapt to new innovations or die. BTC is no exception.

Despite being considered the king of the Crypto world, BTC's technology updates are quite modest compared to the rest. You can notice this in the most recent upgrade called SegWit, which has been out since August 2017.

2.2 History of Taproot

Realizing the need to change, the operators agreed to come up with an upgrade to BTC, named Taproot: focusing on privacy protection, scalability, transaction speed, and network security.

BTC uses P2SH to hash data, so both transaction-related information is displayed and recorded on Blockchains, which results in slow and heavy for the system. In addition, there is still a loss of trader privacy. The biggest change of Taproot is the introduction of MAST and Schnorr signatures.

3. Terminology that BTC Taproot players need to understand

With this upgrade, there will also be new terms to serve them and to understand better, BHO Network will go over a few Crypto terms about Taproot.

Taproot: a type of root with long, strong branches - a metaphor for Bitcoin's new structural change.

  • Previously Bitcoin was a tree with small and luxuriant roots resulting in not much growth (Picture A)
  • With the updated version of Taproot, Bitcoin has transformed into a stronger, larger root (Picture B). This change will help Bitcoin develop more firmly in the future from the underlying technologies.

Soft fork: is an event that changes the protocol software that invalidates the previous transaction.

Hard Fork: changes to the Bitcoin protocol rules that make old blocks and transactions invalid. When the Hard Fork takes place, all nodes and users are required to update the client software to the new version to use it.

Lightning Network: Bitcoin's 2nd layer network is built on top of the Bitcoin platform to promote fast peer-to-peer transactions.

Schnorr Signature: A type of signature that German mathematician and cryptographer Claus P founded, Schnorr with a registered patent and expired in 2008 (this type of signature was born before the ECDSA signature algorithm that Bitcoin used).

Read more: What are NFT games? Top 20 Earning NFT Games in 2022

4. The most accurate information on Bitcoin Taproot

To gain a deeper understanding of each of Taproot's innovative and upgraded components as well as see their highlights. BHO Network will dig deeply through them.

4.1 BIP-340 (Schnorr Signature)

An important and indispensable part of the new update of Taproot is the use of the Schnorr signing scheme - a new signing mechanism. This is an upgrade to the original Elliptic Curve Digital Signature Algorithm (ECDSA) that makes implementing shorter and more efficient signatures.

Due to some patent issues, this signing scheme was not applicable. Satoshi then chose the ECDSA signing algorithm to be free of copyright (at the time, this open source code was widely accepted). Up to now, the Schnorr signature has been officially announced for use.


  • It gets multiple keys inside a complex BTC transaction and generates a unique signature. Multiple signatures can be "aggregated" into a single Schnorr signature (signature aggregation).
  • Solving the hacking problem when confirming transactions before the block validation time increases users' trust in the Bitcoin network.
  • Successful adoption of the Schnorr signature algorithm will boost other Crypto technologies such as the Atomic Swaps mechanism and the Lightning Network.

4.2 BIP 341 (Taproot)

This update package will involve a Pay-to-Taproot (P2TR) concept - the Taproot standard. This mechanism, combined with Schnoor's signature, will make transactions more private.

For example, spending Bitcoins with Taproot could allow transactions in the Bitcoin Lightning Network's 2nd layer network channel, peer-to-peer (P2P) transactions or smart contracts that make transactions indistinguishable.

This makes it difficult for observers looking up Blockchain to recognize which party has signed that transaction. However, the original sending and receiving addresses will still be publicly visible.

For example, suppose you are a business that conducts transactions on the Bitcoin network. In that case, there is some private information about the transaction, and you do not want many people to notice because it is the reserve fund.


  • Provides anonymity when transacting and resists tracking moves from Blockchain lookers.

4.3 BIP-342 (Tapscript)

Tapscript is a coding language upgrade to Bitcoin Script to make way for two BIPs, BIP-340 and BIP-341. This combination saves space which greatly reduces transaction fees on the network.


Makes the Bitcoin network and blocks more efficient with lower costs and increased scalability. A step towards smart building capabilities.

4.4 Ability to build smart contracts

Bitcoin was technically very limited in the past, and most smart contracts were created on top of Bitcoin's core protocol layer and the Lightning Network.

When compared to other platforms like Ethereum , implementing smart contracts on Bitcoin will be too expensive and have poor scalability. It seems that Bitcoin is the underdog in this race. However, the Taproot upgrade makes smart contracts more viable on the Blockchain network.

Taproot has made smart contract implementation on Bitcoin more affordable, powerful and efficient by taking up less space on the main chain.

5. How are smart contracts important to Bitcoin?

Many of you have heard a lot about ecosystems like Ethereum, Binance Smart Chain or Solana but have never heard of the Bitcoin ecosystem. To create ecosystems lies in smart contracts. In the economy, we all rely on contracts to form binding relationships to build up companies or buy and sell products.

With Ethereum or Binance Smart Chain, they have advantages in terms of cost, scalability, and faster transaction processing speed. From there, deploying smart contracts on these networks will be easy.

With the Ethereum ecosystem, smart contracts platforms have products to support Dapps projects DeFi to develop and attract users to their ecosystem.

But with the Bitcoin Taproot update, there are enough elements to make it possible to deploy smart contracts on the network. This could be the premise for a more disruptive development for the Bitcoin network soon. And from here, we have the basis to put our trust and expectation in a "Bitcoin ecosystem".

6. Projections

We use metrics to project the potential of a future Bitcoin ecosystem. Bitcoin has not released an official smart contract, so FDV has fallen to $ 1.286 billion, approximately two times more than Ethereum.

Compared to other large smart contracts, Bitcoin is still far behind. But on a global scale, assuming Bitcoin's smart contracts platform could double in capitalization or FDV, it would also rank above Apple and on a par with Microsoft, with a total value of $2,460 and $2,523 billion, respectively (according to 8 Market Cap).

Read more: What is ERC20? The differences between ERC20 and other tokens

7. What benefit will Taproot bring to Bitcoin?

From that projection, we can see that the benefit Taproot will bring to Bitcoin is huge, almost changing the whole system.

7.1 Saving Space

Compared to scripts to support other platforms, Taproot (P2TR) consumes less space on Blockchain but is slightly larger than P2WPKH output. This is mainly because the P2TR output locks the Bitcoin directly into the public key, not the hash of the public key.

This makes sending to Taproot output a bit more expensive, as the public key takes up more space than the public key hashes. However, spending Taproot output is significantly cheaper because the public key resides in the PubKey Script and thus does not need to be included in the Script Witness.

7.2 Privacy – anonymity

Taproot's upgrade to privacy is groundbreaking. By introducing Schnorr Signatures and Key Aggregation, privacy has been provided to all Taproot users. Taproot also introduces significant privacy benefits through the integration of MAST. As discussed above, Taproot allows locking Bitcoins with multiple scripts at the same time.

However, when spending Bitcoins from Taproot output, the spender need not reveal every possible script (these commands can unlock bitcoins) but simply reveal the script they actually used. In most cases, Taproot users will likely use the pay-to-public-key option, allowing them to keep any backup options they may have planned.

7.3 Security Upgrade

The ECDSA signature that has been upgraded to a better version is the improved Schnorr signature in terms of security features that are safe to use. So this upgrade has helped all users who believe in Bitcoin have massive confidence in this development.

8. FAQs on Taproot

Here are some of the most frequently asked questions about Taproot.

8.1 When to activate Taproot?

As of now, Taproot is still a proposed version. The process for Bitcoin to approve the upgrade goes through many processes.

Once the proposal is formalized, then several BIPs will be assigned after the code is written, reviewed, tested and merged. Bitcoin node operators must decide how and when to trigger the miner upgrade.

In January 2020, the Schnorr, Taproot and Tapscript upgrades were made available. BIPs 340, 341 and 342 were discussed and by the end of 2020, development was completed to merge with Bitcoin Core.

8.2 Why is the Taproot upgrade necessary?

Enabling Taproot will improve the functionality of the Bitcoin network to facilitate fast and reliable transactions. Prior to Taproot, the Bitcoin protocol was still being developed at tier 1, while others like Ethereum had started rolling out at tier 2 and DApps.

Once upgraded, Bitcoin makes the way for implementing smart contracts and the scalability of use cases to power future mainstream NFT and DeFi markets.

As it becomes more efficient with lower fees, the Bitcoin network can incentivize more transactions and broader adoption. In addition, users can keep their privacy on transactions, making BTC more competitive than other privacy coins in the market.

Related posts:

We can see that Taproot is a very beneficial product for Bitcoin. Hopefully, the article "What is Bitcoin Taproot" has helped strengthen your faith in Bitcoin. If you found the article interesting and useful, follow BHO Network for more topics about crypto!

Published on January 22, 2022

Tagged topics

share iconShare