paytotaproot

Pay-to-Taproot (P2TR) is a Bitcoin transaction output type introduced with the Taproot upgrade (BIP341) and activated in 2021. It enables spending conditions to be satisfied either through a key-path spend using Schnorr signatures or through a script-path spend using tapscript, while concealing the underlying scripts unless a script path is actually used. This design aims to improve privacy, efficiency, and flexibility for complex spending conditions.

The P2TR output uses a version 1 witness program with a 32-byte program. This 32-byte value encodes the x-coordinate of the taproot spend key, which is the internal public key tweaked by a Merkle root of a script tree if a script path is employed. Spending can occur via key-path, proving ownership with a Schnorr signature over the tweaked key, or via script-path, which reveals only the relevant tapscript and its Merkle path rather than the entire script set on-chain. This allows sophisticated spending conditions to be used without exposing them to the public ledger unless needed.

Bech32m addresses are used for P2TR on mainnet, and they begin with bc1p. These addresses benefit from improved privacy because ordinary observers cannot distinguish simple key-path spends from more complex script-path spends without additional data. In practice, P2TR supports simpler everyday transactions while enabling advanced scripts to be deployed privately when required.

Adoption and considerations: P2TR has broad support among modern wallets and nodes that implement Taproot, Bech32m, and Schnorr signatures. Wallets that do not yet support Taproot cannot spend P2TR outputs. While offering privacy and efficiency gains, P2TR requires careful design for script-path spending and careful handling of key management to realize its full benefits.