on the crypto
Bitcoin Core is relatively conservative, prioritizing simplicity and security over the number of features. However, that doesn't mean the network is the same as it was in 2009.
Following the release of Segregated Witness (SegWit) in 2017, it was revealed last week that Bitcoin has two other major updates on the horizon. The Schnorr and Taproot signatures will offer the leading crypto network better scalability and privacy.
Schnorr signatures
To understand the benefits of Schnorr signatures you need to know what a digital signature is and how it is used for buy Bitcoins. A digital signature is like a fingerprint used to access data on the blockchain.
When a crypto wallet is created, a private and a public key are produced. The private key is like a fingerprint and is used to authorize outgoing transactions from the wallet.
The private key is also called a "signature". Currently, the algorithm used for the signature is the Elliptic Curve Digital Signature Algorithm (ECDSA). This mechanism was used because Schnorr's signatures were still under patent and were not fully available until after February 2008.
ECDSA provides similar functionality to Schnorr signatures, but is less effective overall. For example, Schnorr signatures are more secure, can allow for better privacy, and save space on the chain. Now that this new signature mechanism is coming to Bitcoin, the network will enjoy a minimum of 15% improvement in space efficiency.
tap root
It might be surprising, but Bitcoin has some features of a smart contract. While it's much more primitive than what Ethereum offers, it still allows for fast payment sidechains like the Lightning Network.
The main problem with smart contracts is the inefficiency of space. Taproot helps solve this problem by bringing privacy benefits along the way. Not all Bitcoin addresses and transactions are the same.
For example, there is a distinction between addresses starting with "1" or "3". Addresses starting with “3” are scripts, which means they can be used by multiple people or implement Segregated Witness (SegWit) technology.
Taproot eliminates this distinction. With it, all transactions look like regular transactions from one person to another, regardless of how many people participated and whether a smart contract was involved.
Next steps for Bitcoin
Adding code for the Schnorr and Taproot signatures to Bitcoin Core is an important step towards their implementation. However, it is likely that it will take a long time before they are posted on the network.
The good news is that both solutions are backward compatible, which makes their implementation easier. All previous features will remain in effect, so it won't harm node operators and users if they accept the changes. Bitcoin isn't known for being fast or rushed, and this time around it will be no different. However, users can take comfort in the fact that Schnorr and Taproot are almost at the finish line.
