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Crypto Explained: Bitcoin Taproot: A Privacy Trajectory


In the early days of Bitcoin and crypto, users thought the network was fully anonymous, and they could transact privately without users decrypting the identities behind transactors. Then Silk Road happened. As it turned out, U.S. investigators proved that Bitcoin and crypto transactions--without privacy-enhancing techniques were, after all, pseudonymous. Use the same address twice, and you can be unmasked.

Still, this didn't deflate developers. Taproot is another shot at making Bitcoin private and more efficient. Bitcoin miners have given it the green light and what will happen next is the implementation via a soft fork. A soft fork is a regular software update when most network users, primarily miners, agree on implementing.

Taproot will change how Bitcoin's scripts operate. In turn, this will enhance transactions' privacy and contribute positively to processing complex transactions. Once live, network users won't easily pick out 'complex transactions,' like those with Timelock releases, for instance. It will be possible because Taproot would 'cloak' these transactions making them indistinguishable from the rest. Accordingly, even if third parties closely monitor BTC transactions, the task would be arduous—if not impossible, a big win for privacy advocates.

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