Taproot
Taproot is a Bitcoin protocol upgrade activated in November 2021 (BIP340, BIP341, BIP342) that improves privacy, efficiency, and smart contract capabilities. It introduces Schnorr signatures and Merkelized Alternative Script Trees (MAST), allowing cooperative multisig spends to look identical to simple single-key transactions on-chain.
How It Works
Taproot combines three BIPs into one upgrade. BIP340 introduces Schnorr signatures, which are mathematically simpler and more efficient than the ECDSA signatures Bitcoin originally used. Schnorr signatures enable key aggregation — multiple signers can combine their public keys into a single key, producing a single signature that looks identical to a regular single-key transaction. This is a massive privacy win for multisig users.
BIP341 introduces Merkelized Alternative Script Trees (MAST), which allow complex spending conditions to be organized in a Merkle tree. Only the spending path actually used is revealed on-chain; all other conditions remain hidden. Combined with Schnorr key aggregation, this means a 3-of-5 multisig transaction can appear on the blockchain as a simple single-signature payment when all parties cooperate.
BIP342 updates Bitcoin's scripting system (Tapscript) to take advantage of Schnorr signatures and enable easier future upgrades. Taproot was activated as a soft fork, meaning older nodes continue to function but do not validate the new Taproot-specific rules. Wallets and services have been gradually adopting Taproot addresses (starting with bc1p), and adoption continues to grow.
Key Points
- Activated in November 2021 as a soft fork (BIPs 340, 341, 342)
- Schnorr signatures enable key aggregation for privacy-preserving multisig
- MAST hides unused spending conditions, revealing only the path used
- Cooperative key-path spends look identical to simple payments; script-path spends reveal only the used branch
- Taproot addresses start with bc1p (Bech32m encoding)