The fundamental aim of Bitcoin blockchain is to enable decentralized private transactions among two parties with minimal transaction fees. With an ever increasing popularity and growing number of daily transactions, achieving the network's core objective is getting tougher as masses of information need to be stored. This can be solved by either increasing the blocksize or reducing the transaction size. Taproot is focused on improving Bitcoin Blockchain efficiency by reducing transaction size.
Taproot, schnorr signatures, and the new Merkle branches update are all part of the BIP-341 (Bitcoin improvement Proposal) as suggested by developers Pieter Wuille, Jonas Nick, and Anthony Towns — the men behind the Taproot upgrade. Currently, the Bitcoin blockchain uses the Elliptical Curve signature mechanism, and the BIP-341 proposal suggested to use Schnorr signatures. The advantage of this is that Schnorr signatures use less storage size and deliver better privacy when compared to Elliptical Curve signatures.
Thanks to features such as Schnorr signatures, the implementation of Taproot will help to enhance network privacy for users. Taproot avoids all the conditions from being exposed, and only exposes the final activated condition of the transaction. What's more, Taproot will define transactions as 'normal' or 'conventional', making it impossible to distinguish one from another. Schnorr signatures also provide better privacy for transactions. The technique helps multiple signatures to be combined into one, supporting a far more efficient use of the blockchain.
The crypto community has largely embraced the activation of Taproot, unlike with the SegWit upgrade where opinions were somewhat divided. For Taproot to be successful, 90% of the threshold has to be achieved before the timeout. If this doesn’t happen, the softfork is considered to be unsuccessful and needs to be redone. Besides SegWit, most of the previous softforks were activated at their initial phase, and more than 95% of the miners had to signal it. For this softfork, however, only 90% of the miners need to signal it, which is why it's expected to be completed early.
On October 18, 2023, the Taproot Assets Daemon was launched as a preliminary version. This is a new development that offers a user-friendly platform for creating, managing, and exploring stablecoins and other assets on the Bitcoin blockchain. This version also enables forward compatibility, meaning no further alterations to the protocol will be necessary.
