What is a Taproot or Bech32m address?

TL;DR: A Taproot address, often labeled as a Bech32m address, is a specific Bitcoin address format starting with "bc1p". Originating from Bitcoin's Taproot upgrade incorporating Schnorr signatures, these addresses enhance transaction privacy and efficiency. With Taproot, complex transactions, like multisig, appear identical to standard ones, boosting privacy. This is pivotal for operations like Lightning channels. While these addresses offer improved privacy, not all wallets support Bech32m yet. Therefore, using a Taproot-ready wallet is crucial when generating and accepting payments to such addresses.

A Taproot address, also called a Bech32m address, is a type of address used in Bitcoin transactions to send payments to receivers who wish to be paid using a native witness v0 output. To use a Taproot address, you must have a Taproot-compatible wallet. The wallet will create Bech32m addresses, which are the addresses used to receive payments. These addresses can be recognized by the initial string "bc1p".

Taproot was a soft fork upgrade to Bitcoin based on the newly integrated Schnorr signature scheme, allowing signature aggregation—meaning several signatures can be represented as one while retaining the ability for anyone to verify each individual signature contained in the aggregate. The result is enhanced privacy and reduced block space: multisig Taproot transactions are indiscernible from singlesig ones, playing a significant role in privacy, especially in Lightning channel operations.

Moreover, through a clever combination of the digital representation of even complex spending conditions and a special tweak to this representation to make it look like a signature, it is also possible to implement even complex inheritance or multi-stage vaulting scripts in a way that hides them from public scrutiny in all but the most exceptional circumstances.

Currently, not all software and providers have the capability to send to Bech32m addresses. As a result, the responsibility falls on the receiver's wallet to generate addresses and determine which ones they are willing to accept. If you intend to utilize Taproot, it is recommended that you employ a Taproot-compatible wallet, as this will allow you to create Bech32m addresses to share with others.