(3:56) There are four benefits to the combination of Schnorr and Taproot on the Bitcoin network:

It becomes more scalable.
It becomes more fungible because outputs end up looking the same.
You get a privacy benefit.
You can have more features and functionality on top of these constructs.

(5:09) “In sum, it’s good all around. There’s not really a downside to it,” said John.

In addition, Taproot makes things like multi-sig easier and more economically attractive, which is good for security. Currently, there’s a tradeoff. If you want to use multi-sig and be more secure, it will cost you more. But with Schnorr/Taproot, there are constructions where a multi-sig would just be one public key and one signature. And so sending to a multi-sig is the exact same cost as sending to a single public key. So the tradeoff doesn’t exist and you get the best of both worlds — security and lower fees.

(7:13) People are wary of Taproot, however, because of 2017, when there was a battle of activity over activating the soft fork. Schnorr/Taproot is a change to the consensus and it is changing the fundamental rules of Bitcoin.

(7:57) “The rules of the game shouldn’t change. But a soft fork is changing the rules of the game a little bit. And in this case, we think it’s beneficial for everyone. There haven’t been any technical objections to the change itself. The question is all about how you activate that change, how you make that change and how you coordinate across a decentralized network to make that change,” said John.

(9:35) As Bitcoin grows, and there are more market participants, the hope is that it becomes more decentralized in terms of ‘hodlers’, miners, exchanges, developers. You get to the point where it’s just more difficult to coordinate. That’s the problem — how do we coordinate and get a decentralized network to upgrade on the fly?

(10:3) At some point, Bitcoin might become ossified and it will become impossible to change the protocol. Hopefully, we’re not there yet, said John, because there are really cool things that can be done with this change.

It is also very important to remember that miners don’t make the rules of Bitcoin. So the debate is not ‘can we convince 95% of miners.’ It’s more philosophical than that, explained John, adding that people are generally in favor of reducing that 95% threshold to 90%.

There’s no need for a block size increase right now, he noted. Right now, fees are moderately high but there is still a lot of room for using the blockchain more efficiently. That’s what the incentives should be. If you merely expand the block space, then there’s really no incentive to be efficient, John explained.