In line with specialists, information safety considerations concerning the Bitcoin improve Taproot are usually not an issue
Bitcoin privacy professionals are far from impressed with a recent circular slide show-style privacy report that puts Taproot, a likely upcoming upgrade to Bitcoin, in the crosshairs.
The Taproot upgrade improves Bitcoin's privacy and scalability. The years-long upgrade has been welcomed by the most active developers of Bitcoin. The community has been invited to test and review it several times. In an unprecedented move for major bitcoin upgrades, the majority of bitcoin miners are now signaling support for the upgrade.
With this in mind, there is a new report by the leading developer of Blockchain Explorer, Blockchair, Nikita Zhavoronkov, who has published several privacy-oriented tools. He argues that the Taproot coins will become distinguishable from other bitcoins as Taproot Bitcoin introduces a new "script" that dictates the conditions under which coins can be issued.
Read more: The Future of Bitcoin: Just How an upcoming upgrade could improve privacy and scale
Zhavoronkov, who made a name for himself for his frequent criticism of Bitcoin, now appears to have one goal: to stop the upgrade.
Bitcoin's privacy experts, however, explicitly agree with Zhakoronkov's claim that Taproot is unable to sniff.
"I think the 'research' sucks, to be clear," said Bitcoin privacy expert Chris Belcher, who works on the Bitcoin privacy projects CoinSwap and JoinMarket. In an email to CoinDesk, he argued that what Zhavoronkov is proposing – stopping Taproot – ironically, would damage Bitcoin's privacy in the long term.
"What Nikita describes is not a problem," the pseudonymous Bitcoin educator and data protection guru 6102 told CoinDesk.
Veteran Bitcoin developer Greg Maxwell, who invented Taproot, went so far as to go on Reddit and label Zhavoronkov's research an "attack".
Let's dive into the details a little. Taproot enables new rules, called scripts, to block coins. Bitcoin has many types of scripts. Most common is just the rule that Bitcoin cannot be sent to another person unless the user uses a private key to sign and send it along. But there are others like the rule that two out of three specific users must sign the transaction in order to move the coins to another location.
Bitcoins included in these different scripts each look slightly different. Remember that Bitcoin's ledger is accessible to everyone. It is possible for busy businesses, namely blockchain analytics firms, to read Bitcoin's transaction history and share what they find with paying customers such as government agencies, who can then use this information to crack down on criminals for various reasons.
In short, Zhavoronkov points out that after adding the new Taproot script, Taproot coins will stand out from other bitcoins.
In particular, he is investigating where Bitcoin transactions are being sent. Bitcoins are stored in blocks called UTXOs (Unspent Transaction Outputs). Suppose Alice has locked 3 BTC in a UTXO but only wants to send 1 BTC to Bob. As soon as she sends the Bitcoin to Bob, her 3 BTC UTXO are divided into two parts: 1 BTC is sent to Bob and 2 BTC are sent back to Alice in what is called a "change address".
If the script type for the address address is the same as the return address but is different from the recipient address, then it is easy to guess where the sender sent their coins. Zhavoronkov argues that this is an assumption (known as a "heuristic" in Privacyland jargon) that blockchain analytics firms can use to find (or at least guess) where the funds are going.
Zhavoronkov argues that adding another script to Taproot increases the likelihood of this privacy hurdle. And he doesn't think this will be a short-term problem.
Zhavoronkov argues that if Taproot is accepted 100%, he will agree with other Bitcoin developers that the upgrade will be a "net good". But he doesn't think it will get to that point.
"Taproot shouldn't be viewed as a 'privacy feature' as it's not like the shielded pool in Zcash or the ring signatures in Monero. The benefits are tiny and only apply to edge cases," he added.
Developer: concerns don't hold water
Bitcoin developers argue that this is an issue that many have already considered. It is not new information.
"The reality is that this is already a 'problem' and adding a new type is likely to have negligible impact while bringing other significant benefits," 6102 told CoinDesk. He added that the Zhavoronkov heuristic points are easy to play.
Maxwell argued (again on Reddit) that Taproot was actually designed specifically to address the problem that Zhavoronkov was pointing out.
“This is a fact that has always been discussed along with the development of taproots and has led to a number of design decisions: B. not providing multiple functions and ensuring that new extensions can be deployed in sheets where they may not be available. " he said.
Belcher added that there are already many, many types of scripts, each of which can be distinguished from another, and adding one more won't be a huge problem, let alone a catastrophic one as Zhavoronkov describes it.
"Bitcoin is already suffering from the situation described in this PDF, and Taproot is improving the situation overall," said Belcher.
Tap Root: A Privacy Enhancement
The developers contacted by CoinDesk, who disagreed with Zhavoronkov, argued that the long-term benefits of Taproot far outweighed Zhavoronkov's concerns.
The privacy benefit that Taproot brings is supposed to be the opposite of what Zhavoronkov describes. With Taproot, Bitcoin users can lock up their coins in a number of different ways, "without being able to tell them apart," as Belcher put it. For example, a transaction used to set up a Lightning Channel can be designed to look just like a normal Bitcoin transaction.
Belcher recently posted a thread on Twitter exploring in more detail how Taproot can improve Bitcoin's privacy over the long term.
"Taproot is a huge privacy perk and should be added to Bitcoin ASAP," Belcher said, later adding that "this shiny and charismatic, but dishonest PDF is an attempt to lower Bitcoin's privacy."
Bitcoin developer Lloyd Fournier, who received a grant from Square Crypto earlier this year, also noted that taproot transactions are cheaper (as opposed to Zhavoronov), giving users an added incentive to adopt them.
“The immense individual and collaborative effort that went into the specification and engineering around Taproot aims to improve Bitcoin in the years and decades to come. The author's emphasis on very narrow short-term concerns does not seem to be in line with the long-term flourishing of Bitcoin, ”he said.