What Taproot Assets means for Bitcoin and the Lightning Network

Bitcoin and Lightning Network are reaching a critical apex for the future of financial technology, networks, and decentralized finance (DeFi). Bitcoin has been mischaracterized as being a slow and unscalable network and being difficult to innovate on. That is not the case.

The Lightning Network, a Layer 2 protocol built on Bitcoin, has been enabling scalable, instant, low-cost Bitcoin transactions. This is just the first step in Bitcoin's path toward being the new protocol for building the future of decentralized finance.

Taproot Assets is entering the global stage. Soon, developers and DeFi enthusiasts will be able to launch tokens and decentralized applications on the Lightning Network. Taproot Assets is a protocol for issuing assets via Bitcoin and transferring assets via the Lightning Network, instantly and cost-effectively.

Taproot Assets matters to Bitcoin and Lightning Network, because a flurry of activity, transactions, and network fees can be generated through the issuing and transferring of new assets on Lightning Network.?

Stablecoins are a major application of token-issuing blockchain protocols since in this case Bitcoin and Lightning Network can be a conduit to both send, receive, and exchange between Bitcoin and USD-pegged tokens. Transactions of these stablecoins result in fees to participants of the Lightning Network, and ultimately a net benefit to Bitcoin as a settlement network for other assets.

Developers can build simple or complex projects involving tokens and smart-contract functionality. This is not new to the crypto-asset ecosystem, where blockchains like Ethereum have been supported since 2015. What is new is that Bitcoin and the Lightning Network offer a level of robustness and security that other chains cannot, while also enabling instant and cost-effective transactions. While the future is uncertain, there is a possibility that Bitcoin and Lightning Network can replicate and/or absorb DeFi applications and volume seen on other chains.?

In short, Bitcoin and Lightning Network can be the foundation of both a powerful decentralized monetary network, and a decentralized application layer for a new generation of developers, entrepreneurs, and venture capital. Much of this is still speculative, and Taproot Assets is still around the corner, so time will tell, but we are a big believer in this possible future.

To participate in this possible future with Bitcoin, Lightning Network, and eventually Taproot Assets, you will need the necessary Lightning infrastructure and liquidity to power your project on Lightning Network. Neutronpay provides an easy on-ramp to the Lightning Network with our infrastructure via simple API integration. If you're interested to learn more reach out to us: contact.neutronpay.com