Pay-to-Taproot (P2TR)
Pay-to-Taproot (P2TR) is a type of ScriptPubKey which locks bitcoin to a script that can be unlocked by a public key or a Merkelized Alternative Script Tree (MAST), allowing the bitcoin to be spent in a variety of ways.
Pay-to-Taproot (P2TR) is a type of ScriptPubKey which locks bitcoin to a script that can be unlocked by a public key or a Merkelized Alternative Script Tree (MAST), allowing the bitcoin to be spent in a variety of ways. On the surface, a P2TR output locks bitcoin to a single Schnorr public key, which we call _Q_. However, this public key _Q_ is actually the aggregate of a public key _P_ and a public key _M_, which is calculated from the Merkle root of a list of other ScriptPubKeys.
Bitcoin in a P2TR output can be spent by publishing a signature for public key _P_, or by satisfying one of the scripts contained in the Merkle tree. The first option is called the key path, while the second option is called the script path.
!Pay-to-Taproot (P2TR) allows users to send bitcoin to either a public key or multiple scripts of their choosing. This preserves privacy and space on the blockchain. Pay-to-Taproot combines the functionality of Pay-to-Script-Hash (P2SH) and Pay-to-Public-Key (P2PK) scripts flexibly, allowing the owner or owners to choose how they would like to spend their money.
This makes P2TR a significant improvement for the privacy of users. While there are many ways of spending a P2TR output, only the one that is used must be revealed, allowing the unused alternatives to remain private. In addition, thanks to Schnorr key aggregation, the public key _P_ can itself be an aggregate key, possibly representing a multisig setup.
Most importantly, the status of public key _P_ as a multisig key or a single key is never revealed, and thus all P2TR outputs resemble one another, undermining many chain analysis heuristics and preserving privacy for users.  Pay-to-Taproot is a version 1 SegWit output, meaning that signatures for P2TR inputs are stored in the Witness of a transaction, not in the ScriptSig.
Like other SegWit addresses, P2TR addresses will use Bech32 encoding. Pay-to-Taproot outputs will be spendable once the Taproot upgrade is activated. However, a few enterprising Bitcoiners have already sent bitcoin to P2TR outputs.
These outputs will remain unspendable until Taproot is activated.
Pay-to-Taproot (P2TR) is a Bitcoin protocol specification that defines technical standards for how Bitcoin software operates. Onramp's Bitcoin glossary provides detailed educational resources on Pay-to-Taproot (P2TR) and other protocol-level concepts to help investors understand the technology underpinning their Bitcoin holdings.
Frequently Asked Questions
What is Pay-to-Taproot (P2TR)?
Pay-to-Taproot (P2TR) is a technical standard in the Bitcoin protocol that specifies how certain operations or data structures should be implemented. It helps ensure interoperability between different Bitcoin software implementations.
Why is Pay-to-Taproot (P2TR) important for Bitcoin?
Pay-to-Taproot (P2TR) improves Bitcoin's functionality, security, or efficiency. Technical standards like this ensure that all participants in the Bitcoin network follow consistent rules, maintaining network consensus.
How does Pay-to-Taproot (P2TR) affect Bitcoin investors?
While Pay-to-Taproot (P2TR) operates at the protocol level, Onramp ensures that clients benefit from these technical improvements through secure, up-to-date infrastructure for Bitcoin custody and transactions.
