Despite bitcoin’s Taproot activation in November 2021, data available from transactionfee.info indicates that the upgrade has only influenced 0.4% of transactions despite promises of greater privacy.
The Taproot upgrade to the Bitcoin Core was activated in November 2021, offering greater privacy of multi-sig transactions and unleashing the potential of smart contracts on the Bitcoin network. Multi-signature transactions require approval from more than one person to go through successfully.
Despite only having a 0.37 percent share of all transactions, bitcoin developers aren’t concerned, citing similar adoption rates of bitcoin’s previous Segregated Witness upgrade, which increased steadily after launch. According to transactionfee.info, “A transaction is considered to be Taproot spending when it spends at least one Taproot input. ” Currently, the adoption rate for Segwit sits at 85 percent.
SegWit, which was proposed by Pieter Wiulle back in 2015, changes the data storage structure during Bitcoin transactions. SegWit updates address the Bitcoin scaling issue, allowing for more transactions to be included in each block. Ultimately, this makes Bitcoin more suitable for large volumes of transactions.
However, SegWit’s primary purpose was to fix “transaction malleability,” a bug that could cause transactions to be reopened, where bad actors could alter the transaction ID and hash. Within four months of its activation, Segwit transactions saw an uptick of 16 percent.
Bitcoin Taproot
In January 2018, Gregory Maxwell proposed the Bitcoin Taproot update, which came at the disappointment by many users who pointed out the lack privacy options available for Bitcoin transactions. They also wanted the network to move faster and to keep their information safer.
However, traders still want to improve Bitcoin’s privacy capabilities.
“I think it’s still going to be a while before we see the entire industry adopting Taproot, but I’m optimistic that the adoption will continue,” opines Bryan Bishop, a Bitcoin Core contributor.
“Remember, Segwit happened in 2017, and adoption took years after that. It takes time for wallet developers and others to add support for Taproot and related technology, like using descriptor wallets and bech32 addresses,” said another developer.
Non-devs bemoan the slow uptick in transactions
The slow uptick in adoption has caused some commentators outside the development team to speak up, including Eric Wall, Arcane Assets Chief Investments Officer, who tweeted:
“@0xB10C do you think you could add more decimal points here? 0% is not exciting to look at. I know we must have breached 0.1% or something! You can see the slope going upwards.”
Indeed, the percentage has crept up very gradually since the Taproot upgrade on Nov. 14, 2021, where it sat at around 0.05 percent. I reached 0.01 percent on Dec. 7, 2021, and 0.2 percent on Dec. 15, 2021. It then grew very slowly to around 0.3 percent on Feb. 5, 2022, before hitting 0.47 percent around mid-April, which is encouraging.
However, the question remains whether the majority of users are happy keeping bitcoin as an investment instrument or a store of value instead of being concerned about the improvements in the underlying blockchain technology. Or, perhaps smart contracts and improved security are features shared with competing blockchains.
For example, the Internet Computer is undergoing an integration process with Bitcoin, enabling it to communicate with the Bitcoin network, using ICP smart contracts to transact bitcoin without the use of a bridge. The integration uses Chain Key cryptography to interface with bitcoin’s public ledger to create a “trustless” relationship that doesn’t depend on a mediation layer, enabling special types of smart contracts to essentially become Bitcoin wallets.
Bitcoin Core is undergoing continuous development
According to the developer, Bitcoin Core development continues to move the bitcoin network forward by fixing bugs and improving the software, protocol, and peer-to-peer network.
In addition, longer-term work will see new technical features such as Miniscript, BIP324 encrypted P2P, Erlay, package relay, and assumvalid/assumeutxo added, together with efforts to separate different constituent code elements of the large codebase.
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