What Is Taproot?
Also known as: Taproot Upgrade, BIP 341, BIP341, P2TR
In short
Taproot is the protocol upgrade added to Bitcoin as a soft fork in November 2021 that brought Schnorr signatures and the MAST structure, improving transaction privacy, efficiency and smart contract (script) flexibility.
Taproot consists of three Bitcoin improvement proposals: BIP 340, which defines Schnorr signatures; BIP 341, which introduces the Taproot spending rules; and BIP 342 (Tapscript), concerning the new script language. Schnorr signatures allow multiple signatures to be combined into one. MAST (Merkleized Alternative Script Trees), on the other hand, stores the different conditions defined for a spend in a Merkle tree; during spending, only the condition that is used is revealed.
As a result, a spend from a multisignature wallet or from an address bound to complex conditions can appear on-chain in a way that is indistinguishable from an ordinary single-signature transaction. This both improves privacy and can lower transaction fees because less data is used. Taproot addresses start with bc1p.
Taproot also provided the technical groundwork for use cases that emerged later, such as Ordinals inscriptions. Because the upgrade is backward compatible, old wallets continue to work; however, wallets and services must add Taproot support to benefit from its advantages. This led adoption to progress gradually.
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