What is Bitcoin? Who is it for? Twitter is full of catchphrases that cover this. Bitcoin is for everyone… wait, it’s for everyone! Bitcoin is a store of value. Bitcoin is a medium of exchange. We can also make the classic appeal to authority and declare that Bitcoin is exactly what Satoshi calls a “peer-to-peer electronic cash system.”
Bitcoin becomes what we make it. It serves the people we choose to build for. If we want Bitcoin to become a store of value or medium of exchange, we need to build the protocols and services that make this possible.
Sometimes it’s more interesting to specifically ask who you’re building for. Are we building for Americans looking for long-term investments? Are we building for Brazilian shopkeepers? Are you a Turkish reseller or a Nigerian software developer?
If you want to use Bitcoin as a medium of exchange, you need to focus on the users who need it the most. Taproot Assets is the tool for that.
Taproot assets
Taproot Assets allows you to take the assets and units of account that people want and need as a medium of exchange today and move them to the Bitcoin infrastructure on the Lightning Network.
From a technical perspective, Taproot Assets is a protocol that allows assets to be minted on the Bitcoin blockchain in a highly blockspace-efficient manner using Taproot transactions, made possible by the activation of the Taproot soft fork in November 2021. Client-side validation is used, the protocol is opt-in, and no consensus changes are required. Alternative assets can be exchanged on the Lightning Network, and the protocol can be used on mainnet starting today.
Taproot Assets is a flexible protocol that already opens the door to a variety of use cases, but its core use case is a stablecoin on Lightning.
If you want to learn more, you can find the documentation here, as well as tutorials and demo videos here.
So what makes this a powerful tool for deployment?
meet people where they are
It’s easy to get immersed in the world of Bitcoin. We use Bitcoin there, talk about Bitcoin constantly, and dig deep into all the things Bitcoin fixes. Their passion and curiosity are powerful. But the real magic happens when you connect that world with people outside of it.
Most people don’t have time to study financial theory or economic history. Free time and disposable income are not the norm in the world. Stay humble. If you want Bitcoin to help the world, meet people where they are. We have the tools and skills to build things that are truly useful, products that people love not because they use Bitcoin, but because they solve real problems.
Adoption will come not only from our better understanding of the Austrian economy, but also from building something so useful that people can’t help but use it. The real solution lies in utilities. The real measure is with the user. The number of people will also increase!
stable coin
Now let’s talk about stablecoins. Like it or not, stablecoins have clearly found a product-market fit. An invisible hand spoke!
Let’s look at some numbers.
In Brazil, around 90% of cryptocurrency transactions are tied to stablecoins, primarily for payments and remittances.
Tether estimates that it has 434 million users worldwide, transacting $31 billion in USDT every day. Approximately 13% of the total supply of USDT is held by savers, who are likely to be users in emerging markets with no other access to dollars.
Tether (USDT) has a market capitalization of $153 billion and total trading volume in 2024 exceeded $10 trillion. USD Coin (USDC) has a market capitalization of $61 billion. (Figures are from CoinGecko at the time of writing.)
utility
Why do people choose stablecoins? Utility.
Most people around the world cannot afford to HODL in a bear market. Most people don’t think deeply about the complexities of fractional reserve banking. They are fathers, mothers, small business owners, doctors, carpenters, farmers, teachers, students, and lead busy lives. Everything that keeps the world moving.
Most people simply want to improve their daily lives, and it’s our job as financial experts to provide them with what they need.
They need stability and affordability.
Infrastructure deployment
As the story of Bitcoin adoption progresses, first a store of value, then a medium of exchange, then a unit of account, the final boss. But will promoting stablecoins prevent Bitcoin from achieving unit of account? No, Bitcoin will become a unit of account if the world needs it and if we make it available.
Those who choose to use stablecoins on the Lightning Network will do so because it is the best option for them. That is the option that provides the most practicality. They are not thinking of “adopting Bitcoin” and have no intention of adopting Bitcoin as a unit of account. But they will adopt Bitcoin, the network. They plan to adopt Bitcoin as a payment infrastructure.
We often think about replacing the Visa network, but to do that we need to be more convenient than Visa, which processes transactions in 175 different currencies.
Our Turkish resellers are experts in their work, but they are not experts in decentralized network technology. He would choose Lightning over Visa if it was a better, more affordable, and easier option to run his business. And for many businesses, Lightning is already a faster, more affordable option.
Let’s imagine you are the owner of a pre-coin shop in Brazil. She manages a business that trades using stablecoins through the Taproot Assets Lightning wallet. She switched to Bitcoin infrastructure. She did so because of simple, easy-to-use mobile wallets that simplify business, reduce costs, and reduce risk. This wallet allows her to make transactions in a variety of currencies with instant settlement and incredibly affordable transactions on a global scale. She came for the utility of this medium of exchange and is now one button away from losing her pre-coiner status.
And if the global fiat collapse finally arrives randomly on a Tuesday afternoon, she’s already running on Bitcoin infrastructure, so all she has to do is press that button and switch from fiat to satellite currency.
multi-asset network
The potential and utility of Taproot Assets-enabled multi-asset Lightning Network is grossly underestimated. Seriously, this is a medium of exchange like the world has never seen before.
Application builders and their users can have any account denomination they like, including US dollars, Brazilian reals, and euros, all routed through Bitcoin. Taproot Assets Lightning transactions require Bitcoin liquidity. These transactions support and extend the Lightning Network and enable numerous options. Alice can send the payment in USD, but Bob can receive it in BTC. Alice can send another payment in USD via the Lightning Network to Carol, who chooses to receive a euro-denominated stablecoin via the SAT-denominated liquidity at the heart of the Lightning Network.
Turkish resellers can use stablecoins to sell products to Brazilian shop owners. Not only can he interact frictionlessly with businesses around the world, but regular Bitcoiners can also seamlessly transact using satellites. They don’t have to touch that stablecoin if they don’t want to.
And it gets even cooler. Let’s imagine this scenario for a moment…
(https://x.com/MichaelLevin/status/1885402488955662448)
A global, scalable, instant payments payment network that is significantly cheaper than Visa. It is a payment network that offers users the option to trade with their preferred coins. This is the beauty of building using Bitcoin as infrastructure. People adopt the network before they even realize it’s Bitcoin.
conclusion
If we want to see Bitcoin as a medium of exchange, and that’s what we’re building it for, then it’s our job as experts to give people what they need: instant, low-fee, stable-value transactions. In other words, multi-asset lightning.
Now, of course, Taproot Assets is a versatile protocol. It can and will be used for all kinds of purposes, including use cases that appeal to Americans who view Bitcoin primarily as a long-term investment. Yes, permissionless innovation! With this protocol, we are helping bring Bitcoin into the era of medium of exchange.
This article was originally published in Bitcoin Magazine’s latest print edition, The Lightning Issue. I share them here to demonstrate the ideas explored throughout the issue.
Source: https://bitcoinmagazine.com/print/taproot-assets-bitcoin-as-a-medium-of-exchange
