Several new softfork proposals were posted by the Bitcoin developer and SegWit inventor Pietr Wuille this week. Dubbed ‘Taproot’ the upgrade has almost no downside and will help facilitate the Bitcoin lightning network that is increasingly being adopted.
Bitcoin protocol developer and SegWit inventor, Pieter Wuille, shared a new softfork upgrade proposal dubbed “Taproot” as a likely complement the Schnorr signature softfork upgrade he published to the developer mail list in July 2018.
The adoption of Schnorr signatures claims to give the network significant scalability and privacy enhancements as they will allow for a simpler method for signing transactions. The advantage of Schnorr signatures is that multiple people can create a public key and then sign it with one signature.
This method contrasts with the inefficient use of separate signatures in the current system. The result of such an implementation is a reduction in both space savings for the network as well as faster verification times.
Bitmex Research estimates that using Schnorr signatures could lead to a 13.1% space savings based on UTXO count alone if fully implemented.
More importantly, multi-signature wallets are becoming popularized due to the rollout of the lightning network that relies on multiple signatures being used. Therefore, the 13.1% savings could compound rapidly as the adoption of lightning and other multi-signature wallets increases.
As proof, the graph below shows the growth of multi-signature wallets.
Moving in tandem with the lightning networks implementation, the number of nodes running on the new P2SH type addresses also shows a strong trend of adoption. Therefore, using both could be an important (and perhaps inevitable) step for the continued growth of the Bitcoin ecosystem.