The Culmination of Bitcoin's Native Expansion Technology: An In-Depth Interpretation of the Taproot Consensus Technical Whitepaper

On May 20, 2024, a technical whitepaper titled "Taproot Consensus: A Decentralized BTC Layer2 Solution" was officially released. The document details the implementation of Taproot Consensus and how to integrate Schnorr signatures, MAST, Bitcoin SPV nodes, and other native Bitcoin technologies to build a fully decentralized BTC Layer2 solution.

After reading the entire text, it is not difficult to find that the Taproot Consensus solution is a culmination of the native scaling technology for Bitcoin. It does not modify the Bitcoin code, but rather cleverly combines several core technologies of Bitcoin, showcasing a concise and ingenious innovative approach.

Before formally analyzing the Yellow Paper, it is necessary to review the technological development history of Bitcoin in order to better understand how Taproot Consensus emerged from the evolution 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," which first proposed a complete technical implementation plan for Bitcoin. Chapter eight of the paper mentioned the SPV (Simple Payment Verification) solution, which is a technological means to verify payments without running a full Bitcoin node, only requiring the storage of block headers.

On January 3, 2009, the Bitcoin genesis block was born. It is worth noting that the initial code of Bitcoin adopted the Elliptic Curve Digital Signature Algorithm (ECDSA), rather than the more suitable Schnorr signature technology. This was because Schnorr signatures had not yet been open-sourced and were still under patent protection at that time.

Schnorr signatures retain all the functionalities and security assumptions of elliptic curve signatures while breaking through Bitcoin's limitation of up to 15 signatures, allowing for the management of 1000+ addresses jointly to handle Bitcoin without affecting the signature speed.

In 2018, after years of validation, Bitcoin core developers officially proposed to introduce Schnorr signatures into the Bitcoin network.

On November 14, 2021, Bitcoin completed the Taproot upgrade, officially incorporating Schnorr signatures and ushering in a new era of decentralized multi-signatures. The Taproot upgrade also introduced MAST (Merkel Abstract Syntax Trees), endowing Bitcoin with functionalities similar to smart contracts.

The combination of Schnorr signatures and MAST enables Bitcoin to drive decentralized multi-signature networks through code instructions, laying the foundation for complex business scenarios on the Bitcoin Layer 2 network.

The Taproot Consensus solution is a culmination of 13 years of technological iteration on Bitcoin.

2. Overview of the Taproot Consensus Solution

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

This description highly summarizes the limitations of the Bitcoin network, pointing out that the correct direction for Bitcoin's scalability is not to make improvements on a layer one network, but to utilize Bitcoin's existing capabilities to build a fully decentralized layer two scaling solution.

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

3. In-depth Analysis of Taproot Consensus Architecture

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

Schnorr+MAST utilizes the native technology brought by the Bitcoin Taproot upgrade to achieve decentralized multi-signature management of Bitcoin, without the need for manual signatures, but driven by Bitcoin code.

The consensus achieved by the second-layer network drives these codes. The way the second-layer network reaches consensus and synchronizes state with the first layer of Bitcoin relies on Bitcoin SPV + BFT PoS consensus (Aura + Grandpa).

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 enables Taproot Consensus to synchronize BTC state in a fully decentralized environment.

Aura+Grandpa is an advanced PoS consensus protocol that achieves Byzantine fault tolerance, ensuring a high level of consistency among network nodes.

The working principle of Taproot Consensus can be summarized as follows: In the layer two system, each validator holds a BTC private key used for Schnorr signatures. The aggregated public key generated through the Musig2 multi-signature scheme forms a large MAST tree. Validators perform BTC transfers and inscription operations to the threshold signature address generated by the MAST tree, submitting data from the BTC mainnet to the layer two network. At the same time, each validator acts as a Bitcoin SPV light node, securely and permissionlessly synchronizing the BTC network state.

In short, the Taproot Consensus builds decentralized BTC multi-signature management on the first layer of Bitcoin using Schnorr+MAST, while the second layer runs a Bitcoin SPV node network to synchronize the data state of the Bitcoin first layer. To ensure the security and reliability of the second layer network, the Bitcoin SPV node network is integrated with Aura+Grandpa, giving it the security level of BFT consensus. Therefore, managing assets on the second layer network does not rely on certain multi-signers, but rather on BFT consensus to achieve true decentralization.

4. Technical Details and Innovations

The Taproot Consensus white paper also explains in detail the implementation details of technologies such as Schnorr signatures, MAST, Bitcoin PSV light nodes, and Aura+Grandpa, making it a comprehensive resource for learning about the latest Bitcoin technologies.

The yellow paper also explains the implementation process of Musig2 and the differences with the Mezo project. Mezo is based on the tBTC protocol and builds a threshold signature network using Bitcoin multisig, which has strong consistency. However, tBTC still requires a multisig network of 9 signatures and cannot achieve complete consensus-driven reliance.

Taproot Consensus adopts a more advanced design by integrating Schnorr signatures, MAST, Bitcoin SPV light nodes with Aura and Grandpa Byzantine Fault Tolerance consensus mechanisms, constructing 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

The Taproot Consensus technical white paper comprehensively describes a layer two solution built entirely on Bitcoin's native technology. It not only respects and inherits the technical direction of Bitcoin but also innovatively combines the new technologies brought by Bitcoin upgrades, becoming the culmination of Bitcoin's native scaling technologies.

With the development of the Bitcoin ecosystem, truly decentralized layer two solutions will become an inevitable path for Bitcoin's development, and solutions like Taproot Consensus will shine.