Over the past couple of months, BRC-20 tokens and ordinals have gained plenty of attention in the Bitcoin community. Some have suggested the developments could raise gas fees and take up unnecessary space on the blockchain. In contrast, others have hailed both as being among the most incredible innovations since Satoshi published Bitcoin's whitepaper in 2008.
Many believe the key to greater Bitcoin adoption is scalability, and thankfully, the Bitcoin community has some of the most passionate and knowledgeable developers to help achieve this goal. One major advancement from the developer community was Taproot.
This innovative Bitcoin upgrade arrived in late 2021 to enhance privacy by simplifying complex transactions, improve scalability by harvesting multiple transactions into a single "smart contract," and introduce advanced smart contract capabilities for more sophisticated spending conditions. It helps to make Bitcoin more secure, scalable, and adaptable to complex transactions.
Now, to address some of the challenges raised by BRC-20 tokens and ordinals, Lightning Labs, a major contributor to the Lightning Network, recently announced the Taproot Assets protocol.
What is the Taproot Assets protocol?
Originally called Taro, Lightning Labs rebranded it as Taproot Assets. The protocol was designed to operate off-chain to avoid blockchain congestion. It allows unlimited assets to be minted and moved in a single on-chain transaction. This design enables asset minters and transactors to use the Bitcoin blockchain without scalability issues.
Users can integrate their BRC-20 assets into the Lightning Network for fast, high-volume, and low-fee transactions. This leverages existing networks, such as wallets, exchanges, and merchants, instead of creating a new ecosystem.
Here are some of the features Taproot Assets offers:
Efficient client support
Taproot Assets is designed to work well for lightweight client applications. It only requires a few resources to verify transactions and can operate even when accessing untrusted Bitcoin transactions.
Partial blockchain awareness
The Taproot Assets protocol doesn't need to know everything about the Bitcoin blockchain. It can function without requiring complete knowledge of the blockchain's history, making it more practical and resource-friendly.
Unique and non-unique assets
Taproot Assets can handle different types of assets. Some assets are unique, meaning there's only one of each (e.g. special edition digital artwork). In contrast, others can be non-unique, allowing for multiple instances of the same asset (e.g. in-game tokens).
Multi-signature and co-signatory arrangements
Taproot Assets provides flexibility for advanced security setups. It allows users to produce creative arrangements where multiple parties can control an asset. This can involve multiple signatures or co-signatories, enhancing the protocol's security and control of assets.
The anonymous developer behind BRC-20, Domos, believed there would be better design choices and optimization improvements around BRC-20. Domos has also praised Taproot Assets as a better alternative for minting new Bitcoin assets than methods like JavaScript Object Notation (JSON).
The final word
In its early stages, Taproot Assets shows great potential with its promises of maximizing chain-space efficiency and offering stability and scalability improvements for BRC-20 through multi-asset mints, sends, and receives.
Further advancements to the Lightning Network may follow to reduce complexity and further improve scalability of blockchain networks. For now, Taproot Assets is the latest important step forward.
Don't forget: with the OKX Wallet, you can view and transfer ordinals and trade BRC-20 tokens.
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