The highly anticipated Bitcoin protocol update, Taproot, is going to activate when it reaches block #709,632, believed to happen around November 16.
The Bitcoin community has been hoping for this upgrade for a while.
I believe this construction will allow the largest possible anonymity set for fixed party smart contracts by making them look like the simplest possible payments.
Taproot provides a new output type with a single signing key form, thus changing the transaction processes.
when spending bitcoin from a Taproot output, the spender need not reveal every possible script that could have unlocked the bitcoin; only the script which they actually used.
The update introduces Pay-to-Taproot as a new way of using bitcoin, which saves space on the blockchain by locking bitcoin to a public key instead of the public key’s hash.
For Pay-To-Taproot transactions to work, BIP 342 adds new scripts that “are used to verify Taproot spends and Schnorr signatures, and they are collectively known as Tapscript”, River explains.
As Bitcoin Magazine shows, using P2SH “has two main downsides.
Schnorr signatures bring better privacy and security than ECDSA signatures by relying on fewer assumptions and getting rid of signature malleability.