Coinbase enables Bitcoin transactions to Taproot addresses.

Coinbase has announced a significant update to its users, allowing them to send Bitcoin to Taproot addresses on October 8th.

This integration expands Taproot's reach, improves privacy, and enhances security. In recent support, Coinbase has joined popular crypto exchanges such as Binance, OKX and Kraken.

The crypto exchange tweeted,

“We are pleased to announce that Coinbase.com users can now send Bitcoin to Taproot addresses, creating more onchain access.”

Bitcoin developer Greg Maxwell initially introduced the Taproot proposal in 2018. Later, Bitcoin developer Peter Wuill developed the update.

In the year Activated in November 2021 with the approval of 90% of Bitcoin miners, the Taproot update is a soft fork that avoids the disruption of hard forks and maintains backward compatibility with older Bitcoin software. This update includes three Bitcoin update proposals: BIP340 (Schnorr Signatures), BIP341 (Taproot), and BIP342 (Tapscript), designed to enhance privacy, efficiency, and smart contract capabilities on the Bitcoin network.

Although the adoption curve is slow, CryptoQuant CEO Ki Young Ju noted a significant increase in January, with Taproot usage jumping from 1% to 39% in just one year.

Along with making transactions more efficient, Taproot's support for advanced smart contracts has enabled innovations like BRC-20 and Runes, Bitcoin-native tokens. He was also instrumental in the advent of Ordinals, a protocol that allows for unique data writing on Bitcoin, as do NFTs on other blockchains.

By November 2023, Bitcoin transaction costs surpassed Ethereum, largely due to Bitcoin Ordinals. Data from BitInfoChart shows that Bitcoin's average transaction fee was $10.34, surpassing Ethereum's average fee of $8.43 on November 20.

The update has led to the rise of Taproot-based startups focused on developing the Bitcoin Ordinals ecosystem, such as Taproot Wizards and Tap Protocol.