More than two months ago, Taproot went live. What has been the biggest update of the Bitcoin network over the years? How does it help the increasingly popular Lightning Network?That’s it The article we are going to summarize its about. It first tells us that “Bitcoin even has a scripting language” and it is called a script.
But before we enter, what is Taproot?
“Taproot is a combination of three Bitcoin Improvement Proposals (BIPs) that can enhance this scripting infrastructure: BIP340-Schnorr, BIP341-Taproot, and BIP342-Tapscript. The key to Taproot unlocking all other features is the introduction of Schnorr signatures, which allow encryption Key and signature aggregation. This means that multiple parties can combine their keys into a public key, allowing them to sign a message.”
It is important to know that Taproot does not allow “full expression” or “Turing complete” contracts like those in Ethereum and all related chains.This type of contract is also not a priority for the Bitcoin network, because Our sister site Bitcoinist points outAlso, to curb our expectations, let’s read what Marty Bent, the host of the “Crypt Story” podcast, warns us about In his communication:
“It is important to understand that these benefits will not be immediate. As software is applied to wallets and other services, they will slowly enter the market over time. Many people expect that Taproot will be activated over the weekend and all its potential benefits will be Realize it now. This is not the case, and it’s important to understand this fact.”
Okay, let’s get into the meat and potatoes.
How does Taproot help the Lightning Network?
First, each lightning channel is composed of “2 of 2 multi-signatures”. Therefore, the first benefit of “being able to combine their keys into a single public key” is “our transaction volume is smaller, so it is cheaper to open channels.” Not only that, “signature aggregation also provides enhanced privacy because its content is indistinguishable from single-signature transactions.”
To find out how this is good for privacy, let’s quote Binance Academy:
“Using Taproot to spend bitcoins may make transactions in Lightning Network channels, peer-to-peer transactions, or complex smart contracts indistinguishable. Anyone who monitors one of these transactions will only see peer-to-peer transactions. However, it is worth noting that , This does not change the fact that the wallets of the initial sender and the final recipient will be exposed.”
However, this is not entirely true…not yet. The voltage article clarified, “Does this mean that the lightning channel is now unrecognizable on the blockchain? Well, the answer for private channels is’yes’, while the answer for public channels is’not yet’.”
BTC price chart for 01/04/2021 on Gemini | Source: BTC/USD on TradingView.com
Private and public Lightning Network channels
What’s the problem? Well, the network will not announce the creation of private channels. On the other hand, public:
“Unfortunately, even if we do hide channel openings on the blockchain, the current specification of the Lightning Protocol requires nodes to broadcast details of fund transactions when they announce their channels.
At first glance, this may seem counterintuitive, but it is also an elegant way to prevent nodes from using fake channels to send spam to the network. “
In addition, let us consider Monitoring company Chainalysis has announced Services related to the Lightning Network. We should assume that there are “witch nodes that monitor the network.” And “there are enough malicious nodes”, a bad guy can paint “a fairly detailed picture of the flow of funds.” Well, Taproot has an elegant solution:
“Taproot’s introduction of Schnorr signatures paved the way for a smart contract called Point Time Locked Contract (PTLC). PTLC operates in the same way as HTLC, allowing nodes to recognize payments, but PTLC has a convenient function that can The identifier is randomized in each hop, so that the node cannot correlate the traffic of the sending node and the receiving node.”
Understand that “Taproot is a door that can open many other doors.” This is a new toolkit that developers around the world will use to create new features and improvements. The information contained in this article is just the beginning, and we can see the handy results from our strengths. Remember what Marty Bent said, “These benefits will not be immediate.” Bitcoin’s Taproot activation phase has just begun.
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