Cryptocurrency exchange Kraken released a report on Bitcoin Taproot last week, describing it as “one of Bitcoin’s biggest upgrades of all time.”
In the report (via The Daily Hodl) entitled Taproot Primer – An Upgrade for the Ages, Kraken Intelligence explains how the three Bitcoin Improvement Proposals (BIPs) will impact Bitcoin through the soft fork.
The Bitcoin Taproot soft fork is slated to launch on November 16, at block 709,632.
The Impact of Bitcoin Taproot
Kraken Intelligence did not understate how important it believes the Bitcoin Taproot upgrade to be, stating:
Taproot is arguably the most significant Bitcoin upgrade to date, setting the stage for mass innovation and adoption.
Kraken noted the upgrade will improve network scalability and user privacy, reduce transaction fees, and create efficient smart contract functionality.
As for Taproot’s impact on Bitcoin’s price, Kraken Intelligence remained cautious of immediate bullish action. It said:
It is most likely that other factors are the primary drivers of price action in the short term, with upgrades like Taproot not impacting price for years to come.”
Instead, Kraken Intelligence looked towards the long-term aspects of Taproot that could allow it to compete with Ethereum. It stated:
Despite short-term price action, the technological upgrades make the Bitcoin network significantly more attractive for building DeFi protocols that could draw incremental demand for Bitcoin.
The report also noted that Bitcoin stakeholders gave Taproot a near-perfect consensus when it passed earlier this year. Kraken said the upgrade “seemingly carries no significant trade-offs” and remains less controversial than the SegWit update implemented in 2017.
Last week, the Bitcoin Core Project released Bitcoin Core 22.0, adding support for the upcoming Taproot launch.