Taproot accounts can create more efficient and private Bitcoin transactions.
Taproot introduces an improved cryptographic scheme called Schnorr signatures. Transactions that leverage Schnorr signatures take up less space inside Bitcoin blocks and are easier to verify. While this won’t translate into a dramatic reduction in transaction cost, Taproot users might notice a slight improvement in overall transaction speed and a very mild reduction in fees.
Regarding privacy, Taproot harmonizes the on-chain footprint of Bitcoin transactions. Without Taproot, it’s very easy for a malicious actor to observe the Bitcoin blockchain and tell a transaction involving multiple signatures (also known as a multisig transaction) from a transaction involving only one signature.
Multisig transactions are typically used to secure large amounts of Bitcoin, so their users would rather not have their transactions easily flagged on the blockchain.
By aggregating any number of signatures into a single signature, Taproot can create transactions that all look identical on the Bitcoin blockchain, regardless of how many signatures were involved. As Taproot slowly becomes the new standard for transacting on Bitcoin, so will privacy improve for all Bitcoin users.
On a final note, Taproot also helps Bitcoin scale because signature aggregation reduces the cost of creating and executing complex Bitcoin transactions such as creating Lightning Network channels. You can learn more about the Bitcoin Lightning Network here.
As updates continue to occur with Taproot and Bitcoin, we will continue to provide secure and transparent information for you to use your Ledger devices seamlessly. Should you want to add more than one Taproot account with the same Ledger device, you will need to ensure that the previous account has at least one transaction history.
For additional information, follow @Ledger and @LedgerSupport.
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