Bitcoin’s major challenges, even though it became a standard amongsy every other cryptocurrency, is lack of scalability and privacy. There have been multiple solutions and ideas like the Lightning Network, which is a second-layer solution to solve Bitcoin’s ever-increasing demand and transactions.
There were a lot of talks about another solution a couple years back, which would apparently solve the privacy problem associated with Bitcoin and also provide more options and flexibility in terms of smart contracts on Bitcoin’s blockchain.
This method/implementation is called “Taproot” and was first proposed by Blockstream CTO Gregory Maxwell. Moreover, this implementation for Bitcoin is being worked upon by prominent names in the Bitcoin Core contributors like Pieter Wuille, Anthony Towns, Johnson Lau, Jonas Nick, Andrew Poelstra, Tim Ruffing, and Rusty Russell.
To understand Taproot, it is necessary to know what P2SH is and how MAST was developed due to shortcomings of P2SH and how they are all aggregated using Schnorr Signatures to give us Taproot.
When a Bitcoin is sent from one address to another, these Bitcoins are locked to that particular address, and the locking up of Bitcoins are done using scripts, which is done automatically after the user hits send. These scripts are only unlocked when certain conditions are met.
P2SH is a method that allows transactions to be sent to a script hash (address starting with 3) instead of a public key hash (addresses starting with 1). To spend bitcoins sent via P2SH, the recipient must provide a script matching the script hash and data, which makes the script evaluate it as true. P2SH was implemented to Bitcoin on Bitcoin Improvement Protocol [BIP] 16.
Since P2SH requires a lot of data to be transferred to and fro, and if there are a lot of conditions to be met, it becomes crowded and has a lot of overhead. Moreover, it is open for everyone to see the path in which the funds could have been spent and also reveal the type of wallets etc.
To overcome these drawbacks, MAST [Merkelized Abstract Syntax Tree] was proposed to be implemented on Bitcoin. Merkle Tree was invented by Ralph Merkle and is used to categorize the data and hence, make it easier to verify the integrity of any of the Merkle trees. In Merkle, all the available data is hashed into a compact hash known as the Merkle Root, and the integrity of the tree that originates from this can be verified immediately.
Combining P2SH with Merkle trees gives MAST, where the Bitcoins that are needed to be spent are signed into different scripts with different mutually exclusive conditions and whichever of these conditions are met in a confirmed transaction first, will determine the course of how these Bitcoins are spent.
These scripts, just like in P2SH, are now hashed into Merkle trees and the lock for these trees are in the Merkle root. The main benefit of MAST is that the data in the trees can be verified almost immediately since the data is organized and can be traced back to the root. It also makes MAST data efficient.
In a broader context, Schnorr signature is a method to aggregate all the messages, public keys, and signatures of multiple transactions into a single one instead of signing each transaction with its own signature, message and then sending it.
Moreover, if there are a multiple Schnorr signature-signed transactions in a block, one could theoretically “add” the individual signatures into a single signature, which could then be verified as a whole and not individually, thus saving a lot of time.
Applying this to multisig transactions would create a single output with a common public key and a common signature. Taproot makes use of Schnorr signature to combine all these transactions into a seemingly single transaction, but combining this with MAST will help determine how the Bitcoins are spent.
Taproot is a fundamental cryptographic innovation that combines Schnorr signature with MAST, and the upgrade to Bitcoin might happen in a single go in a soft-fork. A part of SegWit allows improvements and upgrades on the signature or the introduction of new signature mechanisms via an opt-in soft fork.
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Tether’s [USDT] market capitalization hits all-time high, Facebook in talks with Winklevoss twins, trading firms over new cryptocurrency and more
Crypto News – 25 May – Tether’s [USDT] market capitalization hits all-time high, Facebook in talks with Winklevoss twins, trading firms over new cryptocurrency and more
— AMBCrypto (@CryptoAmb) 25 May 2019
Daily Crypto News – May 25
1) Bitcoin Wallet receives part of 5,000 BTC: A recent Whale Alert highlighted a transaction on May 24, where a large sum of Bitcoin [BTC] exchanged hands between two anonymous wallets. According to the alert the transaction took place at 22:13:23 + 1 minutes and 5,000.00001092 BTC was transferred from an unknown wallet, with address 19SiCYaYKZh9A8HUjuh14eg5wtYzKxiFbB, to another unknown wallet with address 14GcjGjxwadzcpmq9EG3KUgTKATjurbnWt.
Read more at https://bit.ly/2VRQwb0
2) Bitwise Report 2.0: Bitcoin [BTC] futures continues growth: On a month-on-month basis, Bitcoin Futures saw a massive bump in April trading at an average of 10,000 contracts daily, peaking on April 4, with over 22,000 contracts traded. To put that number in perspective, in March 2019, the average contracts traded was less than 4,000. Despite the high standards set in April, the average daily contracts traded in May, with 25 days gone has exceeded 14,000 and still looks to grow, given the price performance of Bitcoin.
Read more at https://bit.ly/2W40sTR
3) Craig Wright on private keys: Craig S Wright has, for years, claimed he is the true creator of Bitcoin [BTC] without providing a shred of evidence to support the same. With the crypto-community levelling, Wright could prove his worth by sending BTC from Satoshi Nakamoto’s touted wallet containing around 980,000 BTCs, the BSV man in a twisted cause and effect situation, stated he will “sign” into his wallet only when he proves he is the creator.
Read more at https://bit.ly/2X6fdlw
4) Tether’s [USDT] market cap hits ATH: Tether and Bitfinex are being closely scrutinized now more than ever due to the NYAG’s lawsuit; however, the scrutiny doesn’t seem to have affected Tether as the market cap of USDT has increased by over $100 million in approximately 70 days.
Read more at https://bit.ly/2McaTjE
5) Tether volume shift: Another controversial topic in the cryptocurrency industry was the issue of fake transaction volumes on many of the popular cryptocurrency exchanges. The magnitude of the topic was so large that even Changpeng Zhao, the Chief Executive Officer [CEO] of Binance had raised red flags. This topic and Tether as a whole received another twist when Larry Cermack, the Director of Research at The Block, pointed out a few parameters when it came to the said volume.
Read more at https://bit.ly/2wmk4mJ
6) Bitfinex’s LEO tokens listed on Delta Exchange: Bitfinex’s Leo tokens faced quite a lot of criticism when they were announced, due to the missing $850 million funds from Bitfinex. The private investment round by Bitfinex also faced a lot of heat from the media. However, in a recent development, Leo tokens are being listed on various exchanges for trading.
Read more at https://bit.ly/2HUEnNB
7) Robinhood en-route a projected valuation of $7 billion: Robinhood, the California-based cryptocurrency exchange made headlines recently when a source close to the organization revealed that it was on the verge of closing their latest round of funding at a valuation of a whopping $7 billion – $8 billion. Sources even claimed that the current round of funding could act as a precursor to an even bigger round of funding, which would pit Robinhood with the bigwigs like Coinbase and Binance.
Read more at https://bit.ly/2W64KKj
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