This is how Taproot advances in Bitcoin, 1 month after its activation

This is how Taproot advances in Bitcoin, 1 month after its activation

Key facts:
  • Wallets and exchanges work from various approaches to adopt Taproot.

  • The volume of Taproot transactions is not high, but the Taproot addresses are.

When in 2017 it was discussed how to solve the sudden and momentary problem of high commissions in Bitcoin, there was a climate of urgency to achieve it, before which the solution of segregated witnesses, or Segregated Witness (SegWit), was proposed.

In addition, heated debates and differences took place that led a part of the community to exit Bitcoin and create their own parallel networks, such as Bitcoin Cash.

But in the case of Taproot, activated exactly 1 month ago, on November 14, 2021, its activation route had much less friction; And best of all, it didn’t generate a forced fork or split of the Bitcoin network.

SegWit was adopted much more quickly by most of the network, due to the need to pay fewer transaction fees. Even so, as of today, some services and wallets do not implement it.

Taproot was not activated with the purpose of reducing commission costs, so perhaps due to this factor its adoption could be slower, since the demand to use the functionalities of this update could be lower.

However, Taproot brings important transaction privacy functionalities, through the Schnorr firms. Likewise, it brings new scripts or commands that will allow better management of the multiple options that a user can use in their wallet.

It also introduces a new version of the SegWit-type wallet address format (Bech32), which with Taproot is called Bech32m.

Next we will make a summary of how the Bitcoin industry is welcoming Taproot, and how they are implementing it in their various products and services.

Taproot on the Bitcoin blockchain

The TXStats.com portal allows us to see the detailed statistics of the Bitcoin blockchain, where the data from Taproot shows that, in total, there are 1,398 bitcoins (BTC) stored in wallets with Bech32m addresses, which are equivalent to 0.0074% of all existing BTC.

This is how Taproot advances in Bitcoin, 1 month after its activation
On the left, the percentage of existing bitcoins blocked in Taproot outlets. On the right, the amount in BTC. Source: txstats.com.

According to the same site, these BTCs are divided into 7,380 outputs (User Transaction Outputs, UTXO) without spending.

It should be noted that, during the first week of December, both the amount of bitcoins and the number of Taproot departures had an exponential increase compared to the second half of November.

This is how Taproot advances in Bitcoin, 1 month after its activation
Outputs and inputs of Taproot in Bitcoin since its activation Source: transactionfee.info.

Although it is difficult to identify the reason for this drastic increase, it is clear that more and more services are integrating Taproot to their platforms, although that does not represent an increase in the volume of transactions.

These are the wallets that already incorporate Taproot

One of the first wallets to adopt Taproot was Muun, a wallet developed in Argentina that has grown in popularity in the last year. This popularity has been gained not only by allowing Bitcoin and Lightning transactions without dividing the balances, but also by having a method of backup and handling of signatures different from the rest of the portfolio.

With Taproot, they expanded this backup method and now the wallet allows you to safeguard the funds with a 2 of 2 multi-signature, increasing security for the user. Muun already allows sending and receiving transactions from Taproot, completely.

Other wallets that also fully support Taproot are Sparrow and Specter, like Fully Noded and, of course, Bitcoin Core, the wallet of the most used client of the Bitcoin protocol.

Regarding the wallets House, Wasabi, Electrum and Blockstream Green, have already announced their plans to activate Taproot; while Samourai and Exodus could enable sending in the next updates, but the reception of transactions from Taproot is already planned.

Some well-known wallets have not yet announced whether they will activate Taproot in the coming months. They are between them Blue Wallet, BTC.com, Mycelium, Trust Wallet and BisqLike the clients of Lightning, the second layer solution of Bitcoin, LND and c-lightning, although the latter can send to Bech32m addresses.

Regarding hardware wallets, both Trezor, with its native Trezor Suite software, such as Ledger, with their desktop application, they have already implemented Taproot for both sending and receiving transactions.

Electrum software can now be used with Trezor, Coldcard and Ledger hardware wallets, but Taproot transactions with this combination are not yet allowed.

Few exchanges have implemented Taproot

The outlook for exchanges or exchanges for BTC and other cryptocurrencies is not very encouraging, since most of them have not enabled Taproot.

Only Swan has enabled withdrawals to Taproot addresses, but not deposits, as well as CashApp, Bitpanda and FTX. As for other houses like Binance, it is not possible to deposit or withdraw with Taproot, while houses like BitMEX, Bitfinex and Bitstamp They already have it planned, but not enabled.

For their part, exchanges such as Hodl Hodl, Paxful, Xapo, Poloniex, Purse.io and LocalBitcoins Plans have not yet been announced, although adopting Taproot is not out of the question.

Miners

Regarding the mining pools, as reflected in the Taproot activation process, all have already included P2TR transactions in the blocks they have mined.

However, only SlushPool and SBICrypto plan to pay the mining reward to Taproot’s Bech32m addresses.

Finally, the vast majority of Bitcoin blockchain explorers already mirror Taproot transactions: Mempool.Space, Blockchain.com, OXT.com, Blockchair, and more.

All the data that we have mentioned regarding the adoption of Taproot among wallets, exchanges, miners and explorers can be found at Bitcoin.it.

Take into account Taproot, even if you have not yet validated its activation

One of the recent developments that were added to Bitcoin from the activation of Taproot was proposed by developer Marco Falke; backed by Bitcoin Core developers like Pieter Wuille and Andrew Chow, and added to code repository of this client to be released in the next version.

The development consists of adding a new parameter to the node policies to recognize Taproot transactions, even if they do not have Taproot activated yet.

Treat Taproot as always active, or in Spanish, Treat Taproot as always active, would allow adding the Taproot descriptor commands before the nodes have the entire Bitcoin blockchain synchronized, especially useful to avoid outdated nodes or that they are intentionally offline sabotage the activation of Taproot on the network.

Marco Falke explains this node policy change in a post:

While all nodes on the network are assumed to agree to the consensus rules, they may not agree to the policy rules. For example, when there is a large volume of transactions, some nodes may reject valid transactions according to consensus rules for not paying a sufficient fee or commission.

Furthermore, policies change frequently between each software release. For example, if a node receives a transaction that requires validation according to changes in the consensus about which it does not agree, it could reject a transaction without warning, although the transaction could be validated in a block

This development changes a rule in spending transactions according to Taproot. Previously it was impossible to make expenses of Taproot before its activation, now it is possible at any time.

Marco Falke, Bitcoin developer

It should be clarified that, although Taproot is already active in the Bitcoin network, its adoption barely reaches just over 50% of the network nodes. With this development, nodes that do not have Taproot activated will not be able to reject incoming transactions from Taproot.

This is how Taproot advances in Bitcoin, 1 month after its activation

As we have said, the optimal functioning of Bitcoin does not depend on Taproot, but is an additional functionality for those who wish to take advantage of its ability to handle signatures.

It remains to be seen how the Taproot scripts will be used to automate processes, potentially leading to advanced contracts in Bitcoin, something that many users would like to see in this protocol.

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