Bitcoin Taproot Usage Rises as Tokens Like PEPE Explode

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On-chain data shows that Bitcoin taproot usage has surged recently as BRC-20 tokens like Pepe Coin have exploded in popularity.

Bitcoin Taproot usage recently crossed the 43% mark

As Rafael Schultze-Kraft, co-founder of on-chain analytics firm Glassnode, pointed out, Taproot is currently being used in more BTC transactions than ever before. Taproot refers to a Bitcoin upgrade that went live in November 2021 and introduced some changes to make transfers more efficient and faster.

The upgrade was initially lightly used, but over the past few months it has seen a lot more use. Two different metrics are available to track the progress of Taproot acceptance: adoption and usage.

Adoption measures the total percentage of BTC transactions that contain at least one Taproot entry. This indicator, however, is not considered the most reliable because it does not contain all the information about the actual adoption of the upgrade.

This is because even if five out of five entries in a transfer use Taproot, this transaction weighting in adoption will still be the same as a transfer that only has one out of five entries using Taproot.

Glassnode created the usage metric to address this issue, and this new indicator tells us how well the upgrade is in use by measuring the actual amount of outputs spent that involve Taproot.

Now, here is a chart that shows the trend of adoption and usage of this Bitcoin upgrade over the past year:

Looks like these two metrics have recently increased | Source: Rafael Schultze-Kraft on Twitter

As the chart above shows, these Bitcoin indicators were at relatively low levels until February of this year, when their values ​​suddenly started to explode. The reason for this spike in Taproot’s usefulness was due to the emergence of ordinals.

The Ordinals protocol uses Taproot and has found a variety of applications on the blockchain. Through this protocol, a method of registering data such as images, texts, videos and other forms has been devised on the network in the form of Registrations.

Signups quickly became popular on the blockchain, leading to an increase in the use of Taproot. Recently, however, the adoption of the upgrade has taken to another level, and it’s all thanks to another application of Ordinals: BRC-20 tokens.

These tokens use the protocol to write text to the string that represents a fungible token. These coins work similarly to ERC-20 tokens on the Ethereum network, although they have many more limitations.

A large amount of BRC-20 tokens have been minted recently, many of which are meme coins. One of the most prominent examples of these is Pepe Coin (PEPE), which has been circling the market thanks to its explosive price growth.

Due to the recent popularity of these BRC-20 meme coins, Bitcoin Taproot adoption and usage both increased sharply to 63% and 43%, respectively.

BTC price

As of this writing, Bitcoin is trading around $27,900, down 2% in the past week.

BTC has fallen in the last 24 hours | Source: BTCUSD on TradingView

Featured image from iStock.com, charts from TradingView.com, Glassnode.com

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