Coinbase has announced a significant update for its users, enabling them to send Bitcoin to Taproot addresses on October 8th.
This integration expands Taproot's accessibility, enhancing privacy, scalability, and security. With the latest support, Coinbase has joined prominent crypto exchanges such as Binance, OKX, and Kraken.
In its tweet, the crypto exchange stated,
“We're pleased to announce that Coinbase․com users can now send Bitcoin to Taproot addresses, creating access to more onchain destinations.”
Bitcoin developer Greg Maxwell initially introduced the Taproot proposal in 2018. Later, Bitcoin developer Pieter Wuille codified the upgrade.
Activated in November 2021 with 90% approval from Bitcoin miners, the Taproot upgrade is a soft fork that maintains backward compatibility with older Bitcoin software, avoiding the disruption of a hard fork. This upgrade includes three Bitcoin Improvement Proposals: BIP340 (Schnorr Signatures), BIP341 (Taproot), and BIP342 (Tapscript), designed to boost privacy, efficiency, and smart contract capabilities on the Bitcoin network.
Although its adoption curve has been slow, CryptoQuant CEO Ki Young Ju noted a significant increase in January, with Taproot usage jumping from 1% to 39% within a year.
Along with making transactions more efficient, Taproot's support for advanced smart contracts has enabled innovations such as BRC-20 and Runes, Bitcoin-native tokens. It also played a crucial role in the emergence of Ordinals, a protocol that allows for unique data inscriptions on Bitcoin, much like NFTs on other blockchains.
Bitcoin transaction costs surpassed Ethereum's in November 2023, largely due to the influence of Bitcoin Ordinals. Data from BitInfoChart revealed that the average Bitcoin transaction fee was $10.34, flipping Ethereum's average fee of $8.43 on November 20th.
The upgrade further prompted the rise of Taproot-based startups, such as Taproot Wizards and Tap Protocol, which specialize in developing the Bitcoin Ordinals ecosystem.