SoK: Digital Signatures and Taproot Transactions in Bitcoin

Bitcoin has emerged as one of the most disruptive innovations since the advent of the internet. Its core principle of decentralization has not only revolutionized the way transactions are made but also paved the way for development of an entirely new blockchain industry. Its security is achieved through the implementation of cryptographic constructs based on elliptic curve cryptography. In this paper, we delve into use of digital signatures in Bitcoin. We provide an overview of Elliptic Curve Digital Signature Algorithm (ECDSA) and the recently adopted Schnorr signatures. Furthermore, we discuss Taproot, a soft fork introduced in Bitcoin, which enhances Bitcoin's versatility for complex applications. With Taproot, multiparty transactions can be designed with greater privacy for all parties involved, as well as for the underlying contracts. This paper offers a comprehensive review of both the ECDSA and Schnorr signature schemes, shedding light on their scripting capabilities within the Bitcoin ecosystem.