Trace typing isn't new. It was invented over a decade ago and was known as IBM SHARK.
There are several crucial differences between current smartphone keyboards and the original concept:
- SHARK used a non-standard keyboard layout called ATOMIK. The purpose of this layout was to greatly reduce the number of mis-recognitions by making the shapes of common words more distinct. For example, "is" and "its" were traced very differently, unlike when using the QWERTY layout.
- SHARK was meant to be used with a stylus, which is arguably more dexterous to manipulate than a finger and lends itself to not being lifting.
The ultimate point was not to let the user connect letters without lifting a finger, but to let the user write in "shorthand." Ie, to not think about letters at all but let the word's shape be memorized and written as a sort of hieroglyph.
Shorthand (hieroglyph-like) handwriting is known to be a very fast alternative to standard handwriting and typing, allowing speeds in excess of 100 WPM, so the potential for a computerized version is large.
I believe that by embracing SHARK's two advantages, using powerful algorithms, and anticipating sufficient practice on a user's part (which, of course, is unthinkable these days) can lead to significant typing speed gains over a tap touchscreen keyboard. However, I'm not sure if it would be faster than a full physical keyboard, especially when used for non-lexical input.