Lightning Labs, a major player in Bitcoin’s lightning network development, made an exciting announcement on Wednesday. They released the mainnet alpha version of their highly anticipated “Taproot Assets” protocol. This release marks a significant milestone, as it allows stablecoins and other tokens to functionally trade on Bitcoin.
Ryan Gentry, Lightning Labs’ Director of Business Development, expressed his enthusiasm for the release, stating, “We believe this new era for bitcoin will see a myriad of global currencies issued as Taproot Assets, and the world’s foreign exchange transactions settled instantly over the Lightning Network.”
The Power of Taproot Assets
Taproot Assets, formerly known as “Taro,” leverage Bitcoin’s Taproot upgrade from 2021. This upgrade not only enhances the network’s smart contract capabilities but also improves the privacy and memory efficiency of transactions. Taproot accidentally enabled Ordinals and BRC-20, enabling the launch of NFTs and tokens on Bitcoin.
However, Taproot Assets takes a different approach by structuring its transactions to be as data-efficient as possible. This design choice allows for significantly lower transaction fees and greater throughput compared to other token standards such as Ordinals.
Developer “domodata” expressed their belief in Taro’s superiority for Bitcoin asset issuance when they stated on Github, “Taro is unequivocally a better solution.”
The Future of Lightning Network
Although the current Taro release supports on-chain functionality, it will soon be compatible with the lightning network. The lightning network enables instant and virtually free BTC transfers by processing transactions in private payment channels off-chain before settling them on-chain.
Gentry explained, “Users will be able to send and receive the currency of their choice over the Lightning Network, using the existing bitcoin liquidity as a global routing currency and medium of exchange.”
Many Bitcoin enthusiasts already view BTC as a viable currency. However, an increasing number of developers see the potential of the Bitcoin network in moving existing currencies. Paypal co-founder David Marcus, now leading lightning-focused company Lightspark, stated in an interview last month that Bitcoin would become a “universal protocol for money on the internet.” He believes Bitcoin can facilitate the transfer of fiat currencies like dollars, euro, and yen.
Tether USD (USD), the world’s largest stablecoin, boasts the highest daily transaction volume at crypto exchanges compared to any other digital asset.
