The Culmination of Bitcoin's Technological Innovations: In-Depth Analysis of the Taproot Consensus Technical Scheme

On May 20, 2024, a Bitcoin Layer2 development team released a technical white paper titled "Taproot Consensus: A Decentralized BTC Layer2 Solution." The document elaborates on the implementation of Taproot Consensus and how to utilize Schnorr signatures, MAST, Bitcoin SPV nodes, and other Bitcoin native technologies to build a fully decentralized BTC Layer2 solution.

After reading the full text, one can feel that the Taproot Consensus plan is indeed the culmination of Bitcoin's native scaling technology. It does not make any modifications to Bitcoin's code, but cleverly integrates several core technologies of Bitcoin, with a clear thought process and an elegant structure.

Before delving into the Yellow Paper, it is necessary for us to review the technological development history of Bitcoin in order to understand how Taproot Consensus emerged from the evolutionary context of Bitcoin.

1. Review of Bitcoin Technology Development

On October 31, 2008, Satoshi Nakamoto published the paper "Bitcoin: A Peer-to-Peer Electronic Cash System," officially proposing the complete technical implementation of Bitcoin. Chapter 8 of the paper mentions the SPV (Simple Payment Verification) solution, which is Simple Payment Verification, a technical means that allows for payment verification without the need to run a full Bitcoin node, only requiring the storage of block headers.

On January 3, 2009, Satoshi Nakamoto mined the genesis block on a small server in Helsinki, marking the official birth of Bitcoin. It is noteworthy that in the initial code of Bitcoin, Satoshi Nakamoto used the Elliptic Curve Digital Signature Algorithm (ECDSA), rather than the Schnorr signature technique that is more suitable for Bitcoin. This was because the Schnorr signature had not yet been open-sourced and was still under patent protection at that time.

In 2018, after years of repeated validation, Bitcoin core developers Gregory Maxwell and others officially proposed BIP, suggesting the introduction of Schnorr signatures into the Bitcoin network.

On November 14, 2021, Bitcoin completed the Taproot upgrade, and Schnorr signatures were officially incorporated into the Bitcoin network, ushering in a new era of decentralized multi-signature for Bitcoin. In addition to Schnorr signatures, the Taproot upgrade also introduced MAST (Merkelized Abstract Syntax Trees), a technology that endows Bitcoin with smart contract-like functionalities.

Schnorr signatures can expand Bitcoin's multi-signature addresses to over 1000, while MAST can drive Schnorr signature addresses for multi-signatures through Bitcoin scripts. Therefore, the combination of Schnorr signatures and MAST can achieve a decentralized Bitcoin multi-signature network that operates without manual signatures, instead driven by Bitcoin code instructions.

This means that Bitcoin can break through a layer of limitations in a trustless manner, achieving more complex and richer business scenarios on the second layer. The Taproot Consensus solution is the culmination of Bitcoin's technological iterations from 2008 to 2021 over these 13 years.

2. Overview of Taproot Consensus Solution

The introduction of the Taproot Consensus technical white paper states: The non-Turing complete nature of the Bitcoin network limits its ability to directly implement Layer 2 scaling solutions similar to Ethereum's Rollup. The script contract layer of the Bitcoin network can only perform simple transfer operations and cannot support more complex smart contract functions. Therefore, it is not feasible to build Layer 2 scaling solutions solely from the Bitcoin script level.

This description succinctly summarizes the non-Turing completeness of the Bitcoin network and the characteristic that Bitcoin script contracts can only execute Bitcoin transfer operations. Therefore, the correct direction for Bitcoin expansion is not to make adjustments on the Bitcoin layer one network, but to utilize Bitcoin's existing capabilities to build a fully decentralized Bitcoin layer two scaling solution.

Taproot Consensus integrates Bitcoin's Taproot technology (Schnorr signatures and MAST), Bitcoin SPV light nodes, and the BFT PoS consensus mechanism to create a decentralized and highly consistent Layer2 network.

3. Detailed Explanation of Taproot Consensus Architecture

Taproot Consensus consists of three parts: Schnorr+Mast, Bitcoin SPV, and Aura+Grandpa.

Schnorr+Mast combines these two native technologies brought by the Bitcoin Taproot upgrade to achieve decentralized multi-signature management of Bitcoin, without the need for manual signatures, but instead driven by Bitcoin code.

So, who drives these codes? The answer is that it is driven by the consensus achieved through layer two networks.

How do layer two networks achieve consensus, and how do these consensus mechanisms synchronize states with the first layer of Bitcoin? This is where the role of Bitcoin SPV+BFT POS consensus (Aura+Grandpa) comes into play.

Bitcoin SPV is a simple payment verification method proposed by Satoshi Nakamoto, allowing synchronization and verification of Bitcoin transactions without the need to run a full node. This feature enables Taproot Consensus to synchronize BTC states in a completely decentralized environment without any permission.

Aura+Grandpa is a more general implementation of Byzantine Fault Tolerance, an advanced PoS consensus protocol that ensures high consistency among network nodes through a distributed protocol.

Summarize the operating principles of the three parts of Taproot Consensus: In the system, each validator holds a BTC private key for Schnorr signatures. The characteristics of Schnorr signatures enable efficient signature aggregation, thereby enhancing the security and efficiency of the system. The aggregated public key Pagg generated by the Musig2 multi-signature scheme forms a large MAST tree.

After the root hash of the MAST tree is generated, validators perform BTC transfers and inscription operations to the threshold signature address generated by the MAST tree, enabling the functionality of submitting data from the BTC mainnet to the second layer network. At the same time, each validator acts as a Bitcoin SPV light node, allowing them to securely and permissionlessly sync the BTC network status.

In short, the Taproot Consensus uses Schnorr+Mast to build decentralized BTC multi-signature management on the Bitcoin layer, while running a Bitcoin SPV node network on the second layer. Taking a certain second-layer network as an example, it operates entirely with Bitcoin SPV nodes, which can synchronize the data state of the Bitcoin layer, thereby achieving information synchronization between the second-layer network and the Bitcoin layer. To ensure the security and reliability of the second-layer network, this solution integrates the Bitcoin SPV node network with Aura+Grandpa, allowing the Bitcoin SPV node network to possess a security level on the BFT consensus level. This means that the assets of the second-layer network are not managed by certain multi-signers, but driven by BFT consensus, thereby achieving true decentralization.

4. Other Technical Details

In addition to the aforementioned technical framework, the Taproot Consensus white paper also explains in detail the implementation details of technologies such as Schnorr signatures, MAST, Bitcoin SPV light nodes, Aura+Grandpa, and more. For those who want to learn and understand the latest technologies of Bitcoin, this white paper is a very comprehensive and detailed learning resource.

In addition, the yellow paper also details the implementation process of Musig2 and its differences from other well-known BTC Layer 2 projects. For example, the underlying technical structure of a certain project is based on the tBTC protocol. tBTC builds a threshold signature network using Bitcoin multi-signature, which has stronger consistency compared to traditional distributed networks.

However, tBTC is still a multi-signature network that requires 9 signatures. To truly achieve a consensus-driven system instead of relying on individuals, it is necessary to combine the multi-signature network with the BFT PoS (Byzantine Fault Tolerant Proof of Stake) consensus mechanism. This is also the distinction between distributed networks and blockchains; distributed networks emphasize distribution but lack Byzantine fault-tolerant consensus, while blockchains, although also a distributed network, rely on Byzantine fault-tolerant consensus to drive them, thus making them a truly decentralized network.

The Taproot Consensus plan adopts this more advanced design. By combining Schnorr signatures, MAST, Bitcoin SPV light nodes, and the Aura and Grandpa Byzantine Fault Tolerance consensus mechanisms, it constructs a highly consistent and secure decentralized Layer 2 scaling solution. This integration not only enhances the scalability and usability of the Bitcoin network but also ensures the security and consistency of the second-layer network.

Summary

This technical white paper systematically and comprehensively describes the implementation plan and technical details of Taproot Consensus, showcasing a Bitcoin Layer 2 solution built entirely on Bitcoin's native technology.

Taproot Consensus not only respects and inherits the original technical direction of Bitcoin, but also combines the technologies brought by the various upgrades of Bitcoin for innovative integration, making it a true culmination of Bitcoin's native expansion technology.

As the Bitcoin ecosystem continues to develop, people will gradually realize that truly decentralized Bitcoin layer two solutions are an essential path for the development of the Bitcoin ecosystem, and solutions like Taproot Consensus will truly shine.