Topic: Bitcoin Monetary Policy But Things are Changing Now (Taproot) - page 2. (Read 319 times)

the trick is

Legacy had a opcode byte, where certain operations with certain rules were formatted depending on the opcode used.

one of those was a "anyonecanspend" opcode, which was a "default: isvalid" AKA backward compatibility bypass

when segwit was activated it allowed segwit to then have some sub list of its own opcodes, after the legacy opcode byte
where segwit has its own "anyonecanspend" sub-opcode byte which is now used as a "isvalid" to allow taproot to have its own sub-sub opcode list

by the taproot activation happening it activated the "isvalid" which.. had no byte limit of witness junk after the opcode byte

legacy had limit bytes of (from memory) 80
segwit had limit bytes of (from memory) upto 10,000
taproot opcodes have under the certain code upto blockweight

people using using the bitcoin blockchain for large scripts has got nothing to do with taproot, using taproot for that incurs more expensive network fees than simply doing so with regular transactions

and taproot transactions are not causing the spike in transaction on the network, they seem to all be plain segwit txs (which shouldn't be such a surprise, as everyone's been slowly moving over to segwit for the past 5 years)


so your post sounds very weird, tbh OP

Probably not.

What seems certain is that miners are happier now.

It looks as if the NFT's are causing the price to fall, right?

Bitcoin, we all know still a small introduction: Bitcoin is the decentralized public ledger-based P2P digital payment system created by Stoshi Nakamoto back in 2009.

Monetary Policy

So before discussing the role of bitcoin as the monetary policy let's take out a quick and easy overview of the monetary policy.
So monetary policy is the actions or policies taken by the central authority, central authority can be the government or the Central Bank / State Bank. In monetary policy, the central authority controls the growth of the economy using different tools. In the financial market, the central authority imposes monetary policy to control the Supply of Money and Interest rates. All of this is done to stabilize the financial market and the growth of the economy.

Central authority is responsible for the unstable financial market, inflation, and any type of crisis related to the economy. The crisis may be less borrowing and spending due to the wrong monetary policy of the central authority by imposing high interests and monetary policy directly affect the economic growth within the country or organization.  

Role of Bitcoin as a Monetary Policy

Bitcoin is a decentralized asset and we all know that it is a potential medium of exchange. We also know that Bitcoin is the Future Store of Value. Let's see how. The Bitcoins Monetary policy allows bitcoin to be the most potential Future digital store of value can be known as the (Digital Gold). Not only Digital gold more than anything we need to be financially free.

• Fixed Supply
  
  Bitcoin has a fixed supply which ensures that Bitcoins monetary policy is perfect and secured in the long run from the point of view of the store of value. Time to Time inflation due to excessive supply is perfectly managed in the Bitcoins monetary policy.
  
  

• Controlled Circulation Supply
  
  Control of supply for the stable growth of capital is a very important tool of the monetary policy and we all better know that the Bitcoins supply control model is well established by the algorithmic event called BTC Halving where the block reward on mining is settled by ½ on every Halving.

• Deflationary Model
  
  We always heard about Bitcoin as a hedge against inflation and the bitcoin model is deflationary in nature let's figure out how it actually works.
  The Deflationary model of bitcoin is its strength, Bitcoin is all about the control of supply by the proper implementation of the Demand and Supply. The circulation supply of bitcoin is controlled by the Halving event which occurs approximately every 4 years. The first halving was in 2012 when the Block reward was reduced from 50 BTC to 25 and then in 2016 25 to 12.5 and after 2020 it was reduced to 12.5 to 6.25. Currently, the Block reward is 6.25 this way the bitcoin supply is controlled by the growth of bitcoin. This model provides Bitcoin the potential to serve as a hedge against inflation.
  These are the few points of the Bitcoin monetary policy and actually, there are bases of Bitcoins strength maximum of the Us actually looks into these points and feels safe while investing in Bitcoin. This allows Bitcoin to be the future Store of value and the perfect medium of exchange and we all agree on it. The community is supporting this particular narrative until now.

This above is a small part of the bitcoin's First view now things are changing considering the store of value and all this we know about the potential future of bitcoin.
But Now things are changing the Bitcoin network is expanding its limits in things are changing now particularly I am going to discuss the Taproot.

Taproot Upgrade

Taproot is a proposed upgrade on the bitcoin network to enhance the scalability and efficiency of the chain with some additional components including a new scripting language, particularly you can say that it was Tapscript.

In this upgrade, there were many new features and components including multi-signature transactions and many other things. My point of discussion is the adoption of Taproot and the features imposed on the bitcoin network after the Taproot upgrade in November 2021.

There were many features in the Taproot upgrade but now let's discuss the taproot adoption and its impact on the bitcoin network activity.


Taproot Adoption

As of now on Bitcoin, we can create NTfs and more complex smart contracts so now on the Bitcoin network due to these features the on-chain activity is increasing which is a good sign, and taproot adoption in the last few months increased by 9.4% as per glass node report. And its utilization has also increased by 4.2%.

Now, this is another approach of the Bitcoin network rather than the monetary role in the crypto market. Now Bitcoins network is approaching it sideways to increase the activity and attract a new audience. I am in favor of this but what others think I am not sure. The Taproots this upgrade is now impacting the Bitcoin on-chain stats like

Increase in the Block size

Normally before the taproot upgrade the average size of the Block was between 1.5 Mb to 2 MB MB but now the size has increased to twice of the previous numbers which are due to the Tapscrip. When we create the more complex smart contract or NFTs it automatically increases the size of the block and with the increase in the Block size, the demand for blocks in a specific time is also increasing. The sum of all story is now Block demand is increasing which is indicating an increase in activity and in the future my observation is the Transaction fees is going to be high due to higher demand and activity.


Impact of Side growth of Network.

We know that images have both brighter and Darker parts. As with the increase in the Taproot, the adoption Bitcoin network is growing with a new type of community which is the NFTs market and other protocols which is increasing activity and this new community is the reason for the future market capital increase and dominance of Bitcoin.
Before that, there was a community supporting Bitcoin due to its monetary policy and now there is another community supporting and also going to support Bitcoin due to its new Utilization features.


How are you Watching it?

In my view, this is a positive approach as the total number of non-zero wallets is increasing which means the community is growing and as much its community grows, the bitcoin market value grows. But on the hand, the transaction fees may increase more in the future as now the average of transactions in the pending pool is increasing. It might lead bitcoin to the same issue as EARTH was facing before. If it happens then what is Bitcoin is going to find out a new trend of L2 projects on Bitcoin or shifting the POW to the POS as in my view if it happens it will greatly damage the bitcoin reputation. Most of the community supports bitcoin due to its decentralization but if Bitcoin changes its Network from the POW to POS then centralization is going to be a big challenge for the community.    

Note: All the information written and compiled by myself is my own observation based on current circumstances, I would like to know my fellow Bitcoiners opinion on this. I am not perfect please mention if I am lacking somewhere.