Since Bitcoin (BTC) underwent its taproot upgrade in November 2021, the amount of the flagship cryptocurrency on its pay-to-taproot (P2TR) outlets has increased and has been in a gradual upward trend since March 2022.
Coincidentally, these trades have grown to 11,740 BTC, or 0.06% of the total existing BTC supply, according to data from Coin Metrics’ State of the Network newsletter published Aug. 9.
Considering the price of Bitcoin at press time — $23,057 according to CoinMarketCap — means nearly $271 million of the first token is currently occupying Taproot exits.
Adoption is slow but sure
As stated in the report:
“In sum, this is small in terms of BTC, but historically, bitcoin upgrade adoption rate has been slow to start.”
To make the point, the report also compared the Taproot data to that of a previous major upgrade – separate witness transactions (SegWit) implemented with the goal of changing the transaction format, payment batching, and enabling the Lightning Network and larger block sizes.
In fact, according to the newsletter:
“After a few years of stalled adoption, SegWit usage now accounts for over 80% of transactions.”
What is taproot?
As a reminder, the Taproot upgrade was officially deployed via a soft fork in November 2021, aiming to introduce major technical benefits to the network, including increasing its security, privacy, and efficiency.
It followed the “Last Civil War” upgrade of 2017 and was implemented alongside the Schnorr signature upgrades, enabling a highly anticipated feature called Signature Aggregation and consolidating all types of BTC transaction outputs into a single Taproot output.
In addition, the Taproot update includes improved scalability, better utilization of the Lightning network, and reduced fees for using the Bitcoin network, thanks to a further reduction in block space.
Finally, and most importantly, this upgrade laid the groundwork for future major updates to the Bitcoin network.
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