Crypto Weekly On behalf of Bitcoin

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Taproot update is enabled on Bitcoin

For the first time in four years, a Bitcoin update has been activated on the network. The update named Taproot was activated on Sunday following great anticipation from the community. Taproot boosts privacy and security as well as a likely slight improvement in the scalability of the Bitcoin network. Not to mention that it allows developers to make protocols involving more complex transactions on the network. The latter is applicable to smart contracts, which are the cornerstone of decentralized applications, for example, decentralized commerce and lending.

Decentralized apps have gained wide acceptance over the past year, especially on Ethereum, as the majority of apps run on Ethereum. Without a doubt, the thriving decentralized application domain has been a key factor behind the positive sentiment in the Ethereum market over the past year. As Taproot makes Bitcoin more usable for decentralized applications, the Bitcoin community, especially Bitcoin maximalists, anticipates Taproot because it could allow Bitcoin to access part of the decentralized applications market on Ethereum or other blockchains such as Solana. and Polkadot.

Even though it may seem like a cinch to some as Bitcoin challenges Ethereum as the backbone for decentralized activities, Bitcoin faces several challenges. First, Bitcoin also lacks scalability similar to the current state of Ethereum, which needs to be resolved in a user-friendly manner. Second, perhaps more important in the long run, is the network effect. Since the majority of decentralized applications are built on Ethereum, most users use Ethereum and vice versa. This is also the reason why users sometimes pay more than $ 100 to execute a single transaction on the Ethereum network instead of using cheaper chains like Solana with a burgeoning number of decentralized applications. Frequent readers of Crypto Weekly know that we are eager to highlight the network effect which is extremely critical to achieving adoption in this regard.

Nonetheless, Bitcoin hit a new all-time high last week of 69,000 (BTCUSD) indicating that the community has positive expectations for Taproot. At around the same time, Ethereum hit a new all-time high of 4,870 (ETHUSD).

Again, no spot ETF in the USA

About a month ago, the first Bitcoin ETF in the United States named ProShares Bitcoin Strategy ETF started trading. However, the ETF is based on Bitcoin futures contracts and therefore does not hold “physical” Bitcoin. This makes the Futures ETF considerably expensive to hold due to the fact that the futures contracts must be carried forward with a negative rolling yield upon the expiration of each contract. For this reason, few people hold the Futures ETF compared to potentially owning a Spot ETF, meaning the latter would have much more influence over Bitcoin, price and adoption. As expected, it doesn’t look like the market will settle for a US spot ETF this year. The U.S. Securities and Exchange Commission (SEC) on Friday rejected a request for a Bitcoin ETF based on the cash market of the ETF and U.S. mutual fund manager VanEck. The ETF has been virtually denied approval due to concerns about market manipulation in the Bitcoin spot market, which has also been the case with the denial of other Bitcoin spot ETFs in the past. One could argue that the reason is somewhat bizarre. As Bitcoin futures indirectly follow the Bitcoin spot market, they are also exposed to potential market manipulation, so the denied approval is likely more due to the fact that the Bitcoin spot market is largely unregulated. , while futures contracts are fully regulated and traded on CME.

Coinbase expects a lot from its NFT platform

Non-fungible tokens, known as NFTs, have gained ground over the past year. Coming pretty much out of the blue, NFTs were arguably the cryptocurrency trend of 2021. US TV host Jimmy Fallon joined other figures including Stephen Curry, Snoop Dog and Ellen last week. DeGeneres to buy or sell an NFT as he bought it. a bored monkey, being basically illustrations of cartoon monkeys. One of the largest, and perhaps the most influential, cryptocurrency exchanges, NASDAQ-listed Coinbase (COIN) announced in October its intention to launch an NFT platform later this year. After his third quarter financial result last week, Coinbase co-founder and CEO Brian Armstrong was quite optimistic about his NFT platform: it is already the case today, ”while continuing by saying that NFTs could be as big or bigger than their cryptocurrency business in the future. Coinbase reported third quarter revenue of $ 1.24 billion and profit of $ 406 million, down almost 75% from the previous quarter.

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