After years of no movement at the protocol level, bitcoin is finally to facilitate more complex conditional spending transactions in addition to data compression.
The latter is the job of Schnorr signatures, described in the Bitcoin Improvement Proposal (BIP) as a replacement of elliptic curve secp256k1 with a standard 64-byte Schnorr signature.
In short, where it isn’t one key but many keys that control a bitcoin address, Schnorr bundles all these keys that have to sign into effectively one key. Saving space.
In addition, it makes it easier for nodes to verify these complex signatures, making propagation more efficient and lowering latency.
The second part is bundled in Taproots, a code change that has been in development for years with Merkelized Abstract Syntax Trees (MASTs) facilitating more complex if/then transactions which are published on the blockchain only based on need depending on what condition is used.
Taproots then adds on top a camouflage in making these complex transactions look like simple transactions.
This could benefit exchanges and likewise services, in addition to second layer protocols like the Lightning Network which get more complex tools to work with.
Where scalability is concerned, it is a very slight improvement, but at least there’s an improvement here while in eth base scalability is still years away.
Overall, it’s more tinkering at the edges rather than any significant new capabilities, but at least protocol development is seemingly moving again with this expected to be included in the next Bitcoin Core client release.