A report published by Blockchair developer Nikita Zhavoronkov claims that the Taproot upgrade may affect the privacy of Bitcoin users, while Bitcoin developers claim that Taproot will strengthen privacy to levels beyond what is currently available.
While Nikita Zhavoronkov, researcher and developer of block Chair, ensures that the implementation of tap root on the network Bitcoin may affect the privacy of users' transactions, the renowned Bitcoin developer, Greg Maxwell, and Bitcoin security expert, Chris Belcher, they claim that Zhavoronkov's concerns have no solid basis, and that he is only trying to sow panic in the crypto community so that the update is not approved.
To get an idea of what these developers are currently discussing, we need to know what Zhavoronkov argues in his report. Titled "Negative Impact of Taproot on Bitcoin's privacy based on the experience with SegWit"The report notes that by activating Taproot in Bitcoin, transactions made with this update will have a “script” that will make them different from other transactions, so blockchain analysis and surveillance companies can detect and identify this type of transactions, and easily know the origin and destination of the funds, destroying the privacy enjoyed by Bitcoin users.
Likewise, the developer assures that the activation of Taproot will do the same as followed, which was “sold” as a solution to correct the malleability of the network, but which is still in an “endless” stage, and which has destroyed much of the privacy of the network.
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Taproot, an activation carried out by miners
At Bit2Me we report on an initiative called Taproot Activation, led by by Alejandro de la Torre of Poolin, the second mining pool Bitcoin's largest network, which seeks to encourage the participation of miners in a survey on the approval of this update. The intention with this survey is to know the opinion of the network's miners about the activation of this important function for the Bitcoin protocol, which promises to optimize the network's privacy and Bitcoin's ability to allow the creation of smart contracts complex, while also improving their scalability.
As Taproot must be activated by miners in consensus, Zhavoronkov addressed his report to them, noting that they must first be aware of and thoroughly examine all the implications of this upgrade before voting to approve it.
First, the developer explains that Taproot implements a new type of script, which will give Bitcoin addresses a special feature, which will degrade the level of privacy of the network for new users and intermediate users. Zhavoronkov supports these claims in the integration of the new type of Bitcoin address, P2TR, which will allow researchers and network observers to follow the trail of money involved in these addresses.
UTXO, the root of the problem
According to Zhavoronkov, Bitcoin's model for spending funds can be a problem for Bitcoin's privacy. When you need to make a 1 BTC transaction, and you have 2 BTC on your wallet, you can use the same amount of money as the Bitcoin wallet. wallet, in the transaction not only 1 BTC is sent to the recipient, but they spend the 2 BTC available, sending 1 BTC to the person we want to transfer to and returning 1 BTC to a direction of change.
This model, together with Taproot, can allow analysts and researchers from blockchain analytics companies or government authorities to easily “guess” the destination of funds. Zhavoronkov explains that if the type of address change script is the same as the sending address, but different from the recipient address, guessing where the sender sent their coins is an easy thing to do.
However, despite arguing that this theory is possible, and that it can significantly degrade the network's privacy level, Zhavoronkov also argues that if the Taproot upgrade is 100% accepted and adopted by the network's miners, the introduction of a new script would not be a privacy issue, although he does not believe that this level of 100% adoption is possible, based on the experience of SegWit.
“It’s been 3 years and SegWit adoption is still below 50% despite economic incentives. There is no reason to believe this number will be any better for Taproot, especially considering the incentives are even worse.”
The other side of the coin
Now, Bitcoin developers say that Zhavoronkov's concerns are unfounded and he has no solid basis to stop the development and activation of Taproot. In this regard, Maxwell argues that Zhavoronkov's concern about introducing a new type of address to Bitcoin has already been studied by the developers, who concluded that it does not represent a serious problem for the privacy of the network's users, since Taproot does not allow addresses to be distinguishable from each other.
In a debate On Reddit, Maxwell claimed that this is a malicious campaign to attack the development and activation of this update, dismissing the arguments presented by Zhavoronkov. Maxwell also called Zhavoronkov's argument hypocritical, saying that the same privacy problem he claims exists for Bitcoin is present in other projects they develop, but they are not doing anything to solve them if they are as serious as they say.
For his part, the anonymous defender of Bitcoin and privacy, known as 6102, expressed on his Twitter account that Zhavoronkov is just trying to get attention, and that, in the future, anyone who wants more privacy will probably use Taproot.
Taproot is part of the work done by developer Greg Maxwell, who publicly presented this update in January 2018. Since then, Taproot has become one of the most anticipated improvements for the Bitcoin network by the crypto community.
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