Taproot, the latest major update to Bitcoin, has higher adoption among wallets than among exchanges in the ecosystem.
This update introduced privacy-oriented features, among other things, indicating that legally regulated bitcoin (BTC) exchanges they might not be highly incentivized to adopt it.
For its part, a growing number of wallets allow Taproot transactions, either to receive or send bitcoins between users. Of 32 wallets listed on the Bitcoin.it site, 17 implement Taproot either for sending or receiving bitcoins.
Exchanges Not Enthusiastic About Taproot
On the exchange side, Taproot’s adoption picture is not very encouraging. In the best of cases, only withdrawals are allowed, but not deposits.
According to a list on adoption of bech32m addresses (which are used by Taproot), out of 52 listed exchanges, 14 allow withdrawals to Taproot addresses, but only 1 of the 52 listed cryptocurrency exchanges, AgoraDesk, Allows you to make deposits.
Some of the well-known exchanges that have partially adopted Taproot (only sending or withdrawing bitcoin) are Swan, CashApp, OkCoin, Bitaroo, StackinSats, VBTC, Bitpanda and FTX, among others.
Exchanges may not be highly motivated to accept bitcoin deposits made from Taproot addresses, as this functionality of Bitcoin is known to improve user privacy and hinder blockchain analysis.
Some of the software wallets that enabled the sending and receiving of Taproot-type transactions are Sparrow and Spectertwo desktop wallets that have gained some popularity in recent months.
CriptoNoticias mentioned Specter and Sparrow recently among the software that put privacy first and give users complete control of their funds.
Another wallet that also supports sending and receiving Taproot type transactions is Muunavailable for mobile devices (Android and iOS), also with ability to send bitcoins on the network Lightning.
As for other wallets such as BlueWallet, Green by Blockstream, Electrum, Samourai, Wallet Of Satoshi (WoS), Wasabi and JoinMarkt, they allow you to receive bitcoins to Taproot addresses, but they do not allow you to send bitcoins.
The complete list of wallets, exchanges and other services that have adopted Taproot can be read here.
Bitcoin Core already generates Taproot addresses automatically
The next update of the Bitcoin Core client, version number 23, already allows to generate addresses compatible with Taproot automatically, according to the developer known as Murch.
In previous versions, you had to use a function known as output descriptor or wallet descriptorwhich in simple words is a label that describes the ability of a wallet to generate the different address formats that exist in Bitcoin.
through the output descriptor (descriptors) Bech32m addresses were generated, which introduced Taproot to Bitcoin. This method, that of descriptors, was implemented by the Muun wallet to enable Taproot in its application a few days after this proposal was activated in the protocol, in November 2021.
Now, all wallets implementing version 23 of Bitcoin Core will have the ability to generate Taproot addresses without using the descriptors, which could trigger the adoption of this update in the ecosystem.
Perhaps wallets that don’t fully support Taproot yet, or only partially support it (only receive bitcoins or only send bitcoins), could adopt this update more easily.
Regarding version 23 of Bitcoin Core, the developers invited the public to test and audit this versionso that possible errors can be debugged or simply improve its programming.
Following a published guide or tutorial A few days ago, the various applications that use the Bitcoin Core client can test its operation and notify developers of any eventualities or improvements to be made.