Dad: Son, how does Taproot make Bitcoin fungible?
Son: Hi Dad,
With Taproot/Schnorr, all on-chain transaction outputs for spending look the same.
Dad: All transaction outputs? Even multisig??
Son: Yes, multisig and opening or closing lightning channel look like any other normal Bitcoin transaction. There are no more "multisig m of n" labels shown in the Block Explorer.
Users can combine signatures into one key and use it as programmable funds, also known as "smart contracts", without identifying the purpose, which improves both privacy and fungibility. The best is, these transactions are smaller and cheaper.


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