The bitcoin users may soon benefit from a tool called “Taproot”. Generally speaking, Taproot will increase the privacy of bitcoin blockchain transactions. In other words, it will not be possible to distinguish a regular transaction from a smart contract on that blockchain.
An example of how it would work would be if there was a contract in which currencies could only be transacted if two people agreed. Or if only one person agreed, after a certain period. Or if a person signed providing a kind of password.
The problem is that since 2012, after one of these conditions was fulfilled, all the details of the smart contract would be visible. Which means, everyone involved would be aware of the different ways in which funds could have been spent, which can, for example, reveal what kind of wallet was used and perhaps even more information.
An evolution of this system would be the use of MAST, the acronym for Merkelized Abstract Syntax Tree. In this model, only the condition of the smart contract that was fulfilled would be on display.
Taproot makes smart transaction equal to a regular one
That’s because Taproot uses a signature scheme that hides that there was a MAST tree. In this way, other bitcoin blockchain participants cannot distinguish a regular transaction from one with a built-in smart contract. That is, the bitcoin privacy increases.
Smart contracts are especially interesting in companies because they may require more people to authorize a particular transaction, increasing the process security and preventing transactions without an agreement from all parties. But there is a multitude of applications for them.
The Taproot is under development and it is not yet known when it will be applied.