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Bitcoin: How do taproot transactions manage to store so much data?

Published by Terlumun Aondover on February 5th, 2025.

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Unlocking the Power of Taproot: How Bitcoin’s New Transaction Engine Effortlessly Stores Data

In a recent article, you may have seen the term “taproot” mentioned in conversations about Bitcoin’s scalability and transaction processing. But what exactly is taproot, and how does it manage to store so much data on the blockchain? In this article, we’ll delve into the world of taproot transactions and explore its capabilities.

What is Taproot?

Taproot is a new transaction engine introduced by the Bitcoin development team in November 2020. It’s designed to improve the scalability and efficiency of Bitcoin’s block size limit, which has been a major obstacle for high-transaction-rate applications like gaming, online payments, and IoT (Internet of Things) devices.

How Taproot Works

Taproot transactions take a new approach to storing data on the blockchain. Instead of using traditional block headers and transaction data, taproot uses a technique called “scripting” to embed additional information directly into the transaction data.

Here’s a simplified breakdown:

Script: A transaction is broken down into its component parts: input scripts (used for signing), output scripts (used for creating new addresses), and data (stored in a separate field).

Data Storage
: Each of these components is encoded using root-specific data structures that store the relevant information directly within the transaction.

Transaction Propulsion
: The input script determines whether to include additional data by evaluating a simple check. This allows for efficient storage and retrieval of complex data.

Power of Ordinals

One of the key features used by taproot is its support for “ordins”. A sequence number is an identifier used in the Bitcoin address space that serves as a unique label or tag associated with a specific account or asset. Sequence values are typically represented using ASCII-encoded strings (e.g., “0x1ABCDEF”).

Taproot transactions can store multiple sequence numbers in the same transaction data structure, thanks to support for “nested sequence numbers.” This allows for complex address hierarchies and the storage of additional information.

Example: How Taproot Stores Data

Let’s look at an example of a root transaction that stores three different addresses:

“0x00000000ABCD1234” (owner account)

“0x00000000EFGGH1234” (payee account)

“0x0000000089012345” (balance data, including owner and payee balance)

The following root script is used for the transaction:


OP_PUSH "order"
OP_PUSH 1
OP_PUSH "text/plain;...<--- order 1
OP_PUSH 2
OP_PUSH "text/plain;...<--- order 2
OP_PUSH 3
OP_PUSH "text/plain;...<--- ordinal 3
...

In this example, the first OP_PUSH instruction pushes the ordinal values (1, 2, and 3) onto the stack. The second and third scripts are then used to encode these ordinal values into ASCII-encoded strings.

Conclusion

Taproot’s innovative approach to transaction routing and scripting allows Bitcoin to store an astonishing amount of data in a single taproot transaction. By using ordinals as a convenient way to embed additional information directly into a transaction, taproot has the potential to revolutionize Bitcoin’s scalability and usability across a variety of applications.

As the technology continues to evolve, it will be exciting to see how the Bitcoin development team improves and expands its capabilities. In the meantime, understanding the fundamentals of root transactions can provide valuable insight into the future of digital assets and their ability to support complex data storage needs.