Changes to the Bitcoin protocol are like pebbles dropped in a lake. They may be imperceptible at first, but their effects can ripple throughout the ecosystem and eventually change the user experience in fundamental ways.
Just as the Segwit upgrade simultaneously alleviated the urgent issue of block space and enabled the launch of the Lightning Network by fixing transaction malleability, Taproot’s improvements to the Bitcoin protocol have immediate implications while laying the foundations for future improvements.
In this article we’ll walk through these improvements, in particular how they affect the Lightning Network in terms of efficiency, privacy, and useability. We’ll start off by giving some background on scripting works in Bitcoin and how it’s enhanced by Taproot.
We’ll then explore the implications of Point Time Locked Contracts (PTLCs) on privacy namely, how channel openings can be hidden, and payments can be decorrelated from each other.
Finally, we’ll wrap up by giving a glimpse into how we can expect better useability through the introduction of stuckless payments, which also rely on PTLCs.