Taproot paves the way for increased functionality on the Bitcoin network by making transactions cheaper, more efficient, and more private

Much has been published about the Taproot update for Bitcoin, and there are numerous resources available to explain its technical aspects. However, the author believes that a more full explanation in plain English of why Taproot is being implemented, what it will bring to the network, and what it might enable in the future is still absent. This essay uses the technical materials that came before it to educate you to the broader ramifications of what is likely the most significant improvement to Bitcoin yet. It is driven by the misconceptions that regular users have about Taproot and a certain lack of understanding.


In a nutshell, the Bitcoin Taproot soft fork will improve scalability, privacy, and smart contract capabilities at the highest degree of abstraction feasible. It will introduce a new address type that will make bitcoin spending seem the same whether the sender is sending a basic payment, a sophisticated multi-signature transaction, or using the Lightning Network. Furthermore, compared to prior address types, Taproot addresses will allow users to save on transaction costs – the more complex the spending criteria, the more the user will save.

Taproot will enable larger and more complicated processes that were previously unfeasible or almost impossible to implement on Bitcoin by lowering transaction size and making practically any transaction look as a simple, single-signature transaction.

You could assume Taproot won’t affect you if you just use Bitcoin to store coins for a long time and move them around between wallets infrequently. In fact, as Taproot builds the basis for more prominent and major upgrades to occur on the network, the possibilities that this soft fork opens up for Bitcoin’s future are vast.

For one thing, Taproot enables the Lightning Network to reach its full potential as a Bitcoin scaling mechanism. The second layer protocol is currently in use in the Bitcoin blockchain, decreasing the fungibility of coins. Because fungibility permits coins to be viewed as equal, it is critical for a monetary product to fulfill its role as a medium of exchange. If transaction outputs are viewed differently by the receiver, they may be discriminated against, preventing users from using their BTC for payments in certain circumstances.

Furthermore, the Lightning Network, as well as other complicated wallets and contracts, will benefit from increased efficiency and cheaper transaction costs, enhancing Bitcoin’s use as a means of exchange. Even the most complex transactions between Taproot-supporting wallets will pay the same fees as simple transactions, thanks to Schnorr signatures. Furthermore, because of the lower costs and increased flexibility and capabilities of smart contracts, very complex setups that were previously impossible to achieve with Bitcoin will be possible in the future.

However, in order to understand why Taproot is being implemented in Bitcoin, one must first understand how Bitcoin transactions function and the numerous enhancements that have been done up to this point, logically leading to Taproot.

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Arsen Islamov
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