Analysis

Our comprehensive analysis reveals an intriguing landscape in terms of the revenue generated from transaction fees and the rising popularity of Bitcoin inscriptions and BRC20 tokens. At the start of 2022, the client was consistently generating between 1.5 to 3 million dollars per week in fees from user transactions. However, with the advent of the Taproot upgrade, BRC20 tokens and Bitcoin inscriptions have begun to gain significant traction, contributing to a peak in weekly fees as high as over 20 million dollars. This remarkable increase denotes the growing exploitation of these tokens on the Bitcoin network, largely driven by the added functionalities and improved efficiency introduced by the Taproot upgrade. The second facet of our analysis shows that the proportion of total transaction fees derived from BRC20 and inscription tokens has climbed steadily since the beginning of the year. From virtually zero contribution at the start of 2022, these tokens now account for approximately 20% of all Bitcoin transaction fees. This progression underscores the rising prominence and acceptance of these tokens within the Bitcoin network. Finally, an examination of transactions using the capabilities provided by Taproot presents a compelling narrative. Currently, nearly half of all transactions on the Bitcoin blockchain involve the functionality enabled by Taproot, indicating a robust adoption rate among users. Furthermore, approximately 4.4 million wallets have executed these types of transactions, signifying broad user acceptance. This evidences the successful implementation and widespread adoption of the Taproot upgrade, fostering innovation and efficiency within the Bitcoin network.

Taproot's Effect on BTC Sustainability