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Special Note on Bitcoin’s Taproot Upgrade Friday, 12th November 2021

Updated: Feb 21, 2022

By Rufus Round, CEO, GlobalBlock Digital Asset Trading Limited


Bitcoin will undergo the taproot upgrade this Sunday when block number 709,632 is mined. We thought this fact worth mentioning to clients and readers considering both the implications of taproot in terms of upgrade and the price action of previous cycles that have incorporated halvenings and upgrades. First and most simply, taproot upgrades Bitcoin’s core software making it more secure and more private along with efficiency enhancements that will create lower transaction fees, enhanced Lightning Network capabilities and improved smart contract flexibility. This upgrade has important implications for DeFi, where currently Bitcoin is largely used as collateral via an ethereum wrapper that creates wBTC or wrapped Bitcoin. Taproot creates a more efficient bitcoin DeFi market. We will get faster, cheaper transactions with greater smart contract functionality, no longer needing an ethereum wrapper. The superior security benefit of Bitcoin’s much larger and more diverse network should prevent many of the rug-pulls that have tripped up one or two ethereum based DeFi projects. Second let us consider the possible price action implications. DeFi as we know it currently largely exploded earlier this year, taking the global crypto market cap from circa $800b on Jan 1st 2021 to just under $3 trillion today. Ethereum itself has gone from $80b market cap to circa $550b now. In this time Bitcoin has only (!) doubled its market cap year-to-date to $1.2T now. Could taproot and an enhanced DeFi lead to outsized gains for Bitcoin? Time will tell, but the question certainly merits consideration. Finally, it is worth throwing the following historical events into the mix - if you need a little more bullish context: the last significant Bitcoin upgrade happened with Segwit in 2017 - the best part of a year after the last-but-one Bitcoin halvening event in 2016. As a reminder, the end of 2017 saw Bitcoin go to nearly $20k, having languished between a range of 1000 to 5000 for most of that year. The most recent Bitcoin halvening happened in May 2020, just over a year ago with taproot coming this weekend. Exciting times ahead. For more colour on taproot: https://bitcoinmagazine.com/technical/short-bitcoin-taproot- explainer For details on DeFi rug-pulls: https://learn.bybit.com/investing/why-crypto-rug-pulls- happen-in-defi/ GlobalBlock Ltd. is a wholly owned operating subsidiary of GlobalBlock Digital Asset Trading Limited and registered in England and Wales with registration number 09450626. GlobalBlock Ltd. has been temporarily registered under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 as a cryptoasset business until 31st March 2022, pending the determination of our application by the Financial Conduct Authority. Web: globalblock.co.uk Tel: +44 203 307 3780 Email: info@globalblock.co.uk

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GlobalBlock EU ApS is a company incorporated and registered in accordance with the applicable laws of the Kingdom of Denmark as virtual asset service provider, with registration number (CVR-number) 45126382. GlobalBlock EU ApS is wholly owned by GlobalBlock Holdings., a company registered in England and Wales with registration number 15929099 . GlobalBlock EU ApS is not a licensed financial services provider and is not supervised as such by the Danish Financial Supervisory Authority. GlobalBlock EU ApS is supervised with respect to anti money laundering by the Danish Financial Supervisory Authority within the scope of the Danish Act on Prevention of Money Laundering and Terrorist Financing and other legislation stemming thereof.

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GlobalBlock Europe, UAB is a company incorporated and registered in accordance with the applicable laws of the Republic of Lithuania as a virtual currency depository wallet operator and virtual currency exchange operator, with registration number 306045642. GlobalBlock Europe, UAB is wholly owned by GlobalBlock Holdings Ltd., a company registered in England and Wales with registration number 15929099,  GlobalBlock Europe, UAB is not a licensed financial services provider and is not supervised by the Bank of Lithuania. GlobalBlock Europe, UAB is supervised by the Financial Crime Investigation Service under the Ministry of Interior of the Republic of Lithuania within the scope of the Law on Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania and other legislation stemming thereof.
 
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