Will Taproot Assets make Bitcoin ecosystem have safer and faster token applications?

The team at Lightning Labs, which has been developing the Lightning Network, recently announced the alpha version of the protocol that "supports Taproot Assets on the Bitcoin blockchain." Why is this technology being highly anticipated by the community? How could it potentially bring about a new wave of revival for the Bitcoin blockchain? And what are the differences compared to the previous ERC-20 tokens?

What is Tarproot Assets

Tarproot Assets are built on top of the Tarproot upgrade, allowing users to issue, mint, stake, and perform more complex token transactions and on-chain functions in a more secure and systematic way with enhanced efficiency and scalability. As a result, the derived assets have the following characteristics including:

• Support for native asset destruction mechanism
• Support for native asset locking and leasing mechanism
• Ability to transact using the Lightning Network
• Automatic regeneration of transaction proofs for blockchain reorganization

Built natively on the Bitcoin blockchain, it is protected by the security of the Bitcoin network rather than relying on centralized off-chain services, aligning with the Bitcoin community's ideal vision of diverse asset standards.

Built Natively on the Bitcoin Network

Assets native to the Bitcoin network can effectively leverage network security and consensus, providing greater assurance for asset holders. This allows for asset transactions using the Lightning Network or more complex operations that were previously challenging with existing technologies.

The concept of constructing diverse assets on the Bitcoin network has always existed, but past attempts lacked viable solutions, often requiring external protocols or centralized components, which hindered native integration on the blockchain.

For example, the BRC-20 tokens introduced earlier this year using the Ordinals Protocol are assets that do not benefit from the security protection of the Bitcoin network, relying on centralized protocols or services, which can lead to systemic issues.

Differing from past attempts like BRC-20, Tarproot Assets aim to enhance asset diversity in the ecosystem in a more secure manner without compromising the core values of the Bitcoin community.

Natively Utilizing the Lightning Network

Assets minted using the Tarproot Assets standard can be transacted using the Lightning Network, enabling the transfer of assets other than BTC through the Lightning Network. The most promising token category currently is stablecoins, which align well with the high-frequency payment scenarios of the Lightning Network, anticipating the potential reintegration of stablecoin giants like USDT into the Bitcoin ecosystem.

The Lightning Labs team aims to provide stablecoin support in the borderless financial world, expecting a surge in offline consumer payment adoption.

In addition to stablecoins, Tarproot Assets and the Lightning Network are also suitable for enhancing national foreign exchange mechanisms. The team stated that this could usher in a new era for Bitcoin, with the possibility of global currencies being issued in the form of Tarproot Assets, enabling real-time settlement of global forex transactions via the Lightning Network.

Can It Continue the Bitcoin Network Narrative

According to a statement by team CEO Elizabeth Stark on the 20th, there are already over 18,000 different assets minted using Taproot Assets on the mainnet, indicating community interest. Compared to more "conventional" token standards like BRC-20, whether Tarproot Assets can further enhance the utility and market attention of the Bitcoin network will be determined by community consensus for future development.