Taproot

Taproot is a 2021 soft fork upgrade to the Bitcoin network that bundled three Bitcoin Improvement Proposals, BIP 340, 341 and 342, into a single activation. It replaced Bitcoin's original ECDSA signature scheme with Schnorr signatures and added support for Merkelized Abstract Syntax Trees (MAST), giving developers new tools to build spending conditions that stay compact and private on-chain.

Schnorr signatures have a mathematical property called linearity, which lets multiple public keys and signatures be aggregated into one. A wallet requiring five signatures, for example, can broadcast a single combined signature instead of five separate ones, shrinking transaction size and fees. MAST works alongside this by hashing every possible spending condition of a contract, such as a multisignature requirement or a time lock, into a Merkle tree and revealing only the branch actually used. Together they let a Taproot output be spent either directly with one signature (a key-path spend) or through a hidden script (a script-path spend), while both look identical to an outside observer.

That indistinguishability is Taproot's headline benefit: elaborate contracts, escrow arrangements, and Lightning Network channels can blend in with ordinary single-signature payments, strengthening privacy across the network. It builds directly on the block-size savings introduced by Segregated Witness (SegWit) and lowers fees for anyone using advanced transaction types.

Adoption has been uneven since the November 14, 2021 activation at block 709,632: usage stayed low until Ordinals inscriptions began embedding data in Taproot's witness space in 2023, briefly pushing Taproot's share of transactions above 40% before settling near 15-20% by 2026. Rising concern over Schnorr's long-term resistance to quantum computing has also spurred early proposals for quantum-safe address formats.