Aligning privacy incentives in P2MR

The recent developments in Bitcoin Improvement Proposal 360 (BIP360) have led to significant amendments, enhancing the protocol's alignment with privacy and security standards akin to those of P2TR, though some distinctions remain. A notable change includes the transition of depth-zero trees to an anyone-can-spend framework, a modification inspired by Ethan Heilman in response to earlier discussions. This adjustment is documented and can be further explored in detail via the GitHub repository link here.

Further discussions among community members including Ruben, AJ, and conduition have introduced a promising alternative to P2TRv2, termed "P2TRH." This new candidate leverages Boris Nagaev’s EC recovery concept to conceal the output key behind a hash, maintaining a key-spend witness size of 64 bytes similar to P2TR. Although this method sacrifices Schnorr batch verification, it offers robust protection against long-exposure attacks by hiding bare EC public keys within the script pubkey. Additionally, like P2TRv2, a PQ leaf could be integrated into a script tree commitment, enhancing security until a necessary soft-fork can be implemented to disable EC key-spending. Despite requiring a follow-up soft fork for full implementation, this approach promises enhanced security for users by safeguarding funds in hashed addresses until the activation of the disabling fork.

The broader community perspective still seems to lean towards the adoption of P2MR post-Q-day, regardless of whether EC-disabling is enacted due to its compelling security features and cost-effectiveness, emphasized by the negligible costs associated with recoverable EC leaves. Some voices within the community, such as ArmchairCryptologist, suggest deploying two distinct output types to address concerns related to transaction fees and the speed of migration in response to CRQC threats. However, there appears to be a general reluctance to adopt such measures extensively, evidenced by the limited migration of the UTXO set to P2TR despite fee considerations. The ongoing debate underscores the complexities and strategic decisions facing the Bitcoin development community as they navigate future upgrades and enhancements.