Cryptocurrency exchange Coinbase has rolled out support for Bitcoin (BTC) Taproot addresses.
Coinbase users can now send Bitcoin from the exchange to Taproot addresses, the firm announced in an
Exciting news!
We’re pleased to announce that Coinbase․com users can now send Bitcoin to Taproot addresses, creating access to more onchain destinations.
— Coinbase Assets (@CoinbaseAssets) October 8, 2024″>Oct. 8 X post. The company pointed out that, by rolling out support for the new addresses, it was “creating access to more on-chain destinations.”
Exciting news!
We’re pleased to announce that Coinbase․com users can now send Bitcoin to Taproot addresses, creating access to more onchain destinations.
— Coinbase Assets (@CoinbaseAssets) October 8, 2024
What is Taproot?
Taproot, introduced through the Bitcoin improvement proposal (BIP) 341, is a Bitcoin protocol update introduced in mid-November 2021 at block 709,632. The protocol change helps users preserve their privacy and activates Merklized Alternative Script Trees (MAST) that condense complex Bitcoin transactions into a single hash, reducing fees and node overhead. The GitHub page reads:
“[Taproot] seeks to minimize how much information about the spendability conditions of a transaction output is revealed on chain at creation or spending time and to add several upgrade mechanisms, while fixing a few minor but long-standing issues.”
Taproot was first proposed by developer Gregory Maxwell back in 2018 and its implementation took three years. Below the hood, Taproot simply switches the way signatures are handled by the nodes, swapping the previous Elliptic Curve Digital Signature Algorithm (ECDSA) signatures with Schnorr signature with MAST and introducing a new scripting language called Tapscript.
Those scripts are what enabled the later introduction of the Bitcoin Ordinals non-fungible token (NFT) protocol, notoriously also taking advantage of the 75% Segwit fee discount. This in turn caused the anger of Bitcoin purists as data showed at the time that Bitcoin Ordinals significantly increased node overhead while bringing little value to maintainers.
Coinbase has waited 34 months to finally roll out support for the latest Bitcoin address standard, which frustrated part of its user base. Other major industry players such as OKX, Binance and Kraken have supported the standard for some time.
The announcement follows a recent report indicating that more than 617 million identity-verified people or organizations use cryptocurrencies worldwide. Data from early 2024 shows about 545,000 to 610,000 daily active Bitcoin wallets, with a seven-day moving average of about 585,000 unique wallet addresses.
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