Bitcoin’s Taproot Privacy Tech is Ready But Can’t Be Deployed Just Yet

Bitcoin’s privacy has never been that strong. The fact that anyone in the world could look at any transaction using a blockchain explorer is a testament to that.

However, things wouldn’t stay that way forever. Developers have been looking for a way to fix it or at least improve Bitcoin’s privacy over time. Greg Maxwell, who is a famous Bitcoin developer, proposed what is called Taproot earlier this year.

This generated a lot of interest in the Bitcoin community. Though it doesn’t provide Bitcoin with full security, Taproot’s code aims to make all Bitcoin transactions look the same to outsiders, making payments, payers, and payees unidentifiable.

The talk about the project has slowed down though, as other projects are prioritized. Bitcoin developers haven’t forgotten about Taproot though, with a lot of work going on behind the scenes. Mathematician Andrew Poelstra came forward with a mathematical security proof back in April.

Xapo engineer and Bitcoin Core contributor Anthony Towns meanwhile proposed an idea in July that could potentially reduce the amount of data the technique makes use of.

The fact that developers have continued to work on its shows why many believe Taproot would be an enormous privacy boost for Bitcoin. Since it isn’t a difficult change to make to Bitcoin, it sounds like a great idea.

Towns stated during an interview that:

Taproot is simple enough it could probably go in straight away.

The main problem though is that Taproot is dependent on a technology that is yet to exist.

Towns explained:

Without Schnorr, Taproot doesn’t get you all the way to where you want to go.

Schnorr the missing piece for Taproot

Taproot has the potential to keep Bitcoin payments private however, it requires the implementation of Schnorr.

Since Bitcoin’s ledger is public, it becomes very clear once someone uses one of these transactions.

The Schonrr tech is a new transaction signature structure that is supposedly a significant improvement to the current signature scheme. For example, Schnorr allows for a transaction to encrypt multiple keys into one, a key ingredient for the Taproot upgrade.

Taproot stops all that by making these transactions look similar to every other boring payment. This is according to Maxwell in the announcement of the technology.

Blockstream co-founder Pieter Wuille in his presentation on the topic stated:

Schnorr is necessary for that because, without it, we cannot encode multiple keys into a single key.

Schnorr is finally been worked on. All signs suggest that it is poised to become Bitcoin’s next crucial upgrade. Wullie recently published a technical proposal discussing how Schnorr might be added to Bitcoin one day.

The development of Schnorr has taken years, with developers now dreaming about what they can build on top of the technology once it is completed. According to Towns, Schnorr is a very exciting change but Taproot is the cherry on the sundae.

Thinking even further, developers are exploring other enhancements such as those enabled by Schnorr. It is very important to note that Schnorr isn’t the only important development being considered at the moment.

Towns believe that privacy enhancement might be added in with other upgrades on the blockchain.

He stated:

As far as I’m concerned, Taproot, Schnorr, Graftroot is a bundle that all goes together.

Graftroot is another technology pioneered by Maxwell.

MAST upgrade

It doesn’t end there though. Town believes that the long-anticipated changes will go live at the same time. MAST is one of them, which is a proposal to improve Bitcoin smart contract capabilities.

SIGHASH_NOINPUT upgrade

Another one is SIGHASH_NOINPUT, a change that could lead to a more reliable lightning network.

Towns are starting to think of the above-mentioned technologies as one, even though they have different names and were proposed at different times.

What to do next

Developers have a problem on their hands, deciding which changes come first. There are so many of them slated to occur that making that decision is hard for developers.

In his presentation, Wullie explained why it’s not such an easy decision. He noted that there is a pressure, though small on deploying all these changes together at once. Each time they deploy a new consensus change, it requires a new addressing format.

Since the addresses are different from the old one, this makes it very clear who is using the new future. This is particularly obvious since not everyone is going to suddenly adopt the feature the day it launches.

That will be a small hit to privacy, and doing it multiple times would be even worse. However, implementing all the changes at once would be an even bigger mess.

Signature aggregation is another change that is being discussed, as it is the most-hyped application of Schnorr. It is expected to help Bitcoin scale even further.

However, it is very complex and needs further review, though the change is something developers don’t feel is need urgently.

Schnorr might not halt Taproot

There is a silver lining within all this. Schnorr might not prove to be prioritized over Taproot.

Wullie has been focused on a proposal that will deploy Schnorr and Taproot at once. He believes that privacy addition from Taproot is an exciting one, tagging it an enormous win for smart contracts in the Bitcoin network.

About Schnorr, Towns noted that developers still working out some kinks, such as a hardware attack vector that Maxwell discovered.

The developers don’t want to give the code timelines considering the fact that upgrades often take longer than expected. With Schnorr, things are no different.

Poelstra was hopeful that it could be deployed before the end of the year, allowing Bitcoin users to opportunity to decide whether to adopt it or not. It, however, depends on how quickly developers can work on its change, code it and get it reviewed.

Towns explained this as: