Although Bitcoin Taproot was activated in November 2021, data available from transactionfee.info indicates that only about 0.37% of all Bitcoin transactions use Taproot, compared to 85% for the Segregated Witness update that was activated in August 2017.
The Taproot update for Bitcoin Core launched in November 2021 and promised a slew of new features like increased privacy, support for multi-signature transactions, and making Lightning nodes appear as Bitcoin transactions.
Despite only having a 0.37% share of all transactions, Bitcoin developers are not worried, citing similar adoption rates to the previous Bitcoin update Segregated Witness, which has been steadily increasing since its launch. Currently, the adoption rate is 85%.
SegWit, proposed by Pieter Wiulle in 2015, changes the data storage structure during Bitcoin transactions. SegWit updates address the issue of Bitcoin scaling, allowing multiple transactions to be included in each block. Ultimately, this makes Bitcoin more suitable for large transaction volumes.
However, the main purpose of SegWit was to fix “tradeability”, a bug that can cause transactions to reopen, as bad actors can change the transaction ID and hash. Within four months of its activation, Segwit transactions saw a 16% increase.
In January 2018, Gregory Maxwell suggested the Bitcoin Taproot update, which upset many users who pointed out the lack of privacy options available for Bitcoin transactions. They also wanted the network to move faster and their information to be more secure.
However, traders still want to improve Bitcoin’s privacy capabilities.
“I think it will take some time before we see the entire industry embrace Taproot, but I am optimistic that adoption will continue,” says Bryan Bishop, a Bitcoin Core contributor.
Remember, Segwit happened in 2017, and adoption took years after that. “Wallet developers and others are taking time to add support for Taproot and related technologies, such as using wallet descriptors and bech32 addresses,” another developer said.
Non-developers complain about the slow increase in transactions
The slow rise in adoption led to some commentators outside the development team speaking out, including Eric Wall, chief investment officer at Arcane Assets, who tweeted:
@0xB10C Do you think you can add more decimal points here? 0% is not interesting to watch. I know we’re over 0.1% or something! You can see the slope going up.”
In fact, the percentage has increased gradually from 0.0048% of transactions using the Taproot update on November 14, 2021. The Bitcoin Wiki also reveals that the use of the Pay for Taproot (P2TR) output by customers, Bitcoin wallets and exchanges is still low. On the other hand, one in three Bitcoin hardware wallets has enabled P2TR transactions.
However, the question remains whether most users are happy to hold bitcoin as an investment vehicle or as a store of value rather than worry about improvements in the underlying blockchain technology. Or perhaps smart contracts and enhanced security are common features with competing blockchains.
For example, an Internet computer undergoes an integration process with Bitcoin, which allows it to connect to the Bitcoin network, using ICP smart contracts to deal with Bitcoins. Stacks is another platform that plans to launch non-fungible tokens on the Bitcoin network.
Bitcoin Core is constantly evolving
According to the developer, Bitcoin Core continues to advance the Bitcoin network by fixing bugs, improving software, protocol, and the peer-to-peer network.
Furthermore, long-term work will see the addition of new technology features such as Miniscript, P2P-encrypted BIP324, Erlay, packet relaying, and Enforce/Defaults, along with efforts to separate the various core blocks of the large code base.
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