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What is Bitcoin and who is it intended for? There are numerous slogans floating around on Twitter to encapsulate this concept. Bitcoin is intended for all… or rather, it’s for anybody! Bitcoin serves as a repository of value. Bitcoin acts as a method of exchange. We could rely on traditional authority figures and assert that Bitcoin is just as Satoshi described, “A Peer-to-Peer Electronic Cash System”.
Bitcoin evolves into what we forge it to be. It caters to the individuals we decide to develop for. If we aspire for Bitcoin to serve as a store of value or a medium of exchange, we must create the protocols and services that facilitate this.
Sometimes, it’s more engaging to specify, who are we constructing for? Are we crafting for Americans seeking a long-term investment? Are we constructing for a retailer in Brazil? A reseller in Turkey? A software engineer in Nigeria?
If we desire Bitcoin to be a medium of exchange, we must concentrate on the users who require it the most — and Taproot Assets is the solution for that task.
Taproot Assets
Taproot Assets empowers us to transfer the assets and units of account that individuals need and want today as mediums of exchange — integrating them into Bitcoin’s infrastructure on the Lightning Network.
From a technical angle, Taproot Assets is a protocol that enables the minting of assets on the Bitcoin blockchain in a remarkably blockspace-efficient manner using taproot transactions, made feasible by the November 2021 Taproot soft fork activation. Client-side validation is employed, the protocol is opt-in, and no consensus alterations are needed. Fungible assets can be exchanged on the Lightning Network, and you can utilize this protocol on the mainnet now!
Taproot Assets is a versatile protocol that’s already paving the way for numerous applications, but the principal use case is stablecoins on Lightning.
For those keen to find out more, here are the docs, with tutorial and demonstration videos available here.
So, what makes this such a potent instrument for adoption?
Engaging People Where They Are
It’s effortless to get engrossed in the Bitcoin realm — where we utilize bitcoin, discuss it perpetually, and delve deeply into everything it remedies. That enthusiasm and inquisitiveness is formidable. However, the real magic transpires when we link that realm to individuals outside it.
The majority of people lack the time to analyze monetary theory or economic history. Free time and disposable income are not commonplace in reality. Stay modest. If we aim for Bitcoin to support the world, let’s connect with individuals where they are. And we can: We possess the tools and expertise to craft genuinely useful solutions — products that people cherish not merely because they’re Bitcoin-enabled, but because they tackle real challenges.
Adoption won’t arise solely from our profound understanding of Austrian economics; it will stem from constructing things that are so beneficial individuals can’t resist using them. The genuine metric is in the utility. The authentic gauge is in the users. The number of users is on the rise!
Stablecoins
And so let’s discuss stablecoins. Adore them or question them, stablecoins have undoubtedly established product-market fit. The invisible hand has expressed itself!
Let’s examine some statistics:
In Brazil, nearly 90% of cryptocurrency transactions involve stablecoins, primarily for payments and remittances.
Tether claims it has 434 million users globally, transacting $31 billion USDT daily. Approximately 13% of the total USDT supply is possessed by savers likely belonging to emerging markets lacking access to dollars.
Tether (USDT) boasts a market cap of $153 billion and recorded over $10 trillion in total volume in 2024. USD Coin (USDC) follows with a $61 billion market cap. (Figures from CoinGecko at the time of writing.)
Utility
Why have individuals opted for stablecoins? Utility.
Most people around the globe cannot afford the luxury of HODLing through a bear market. Most individuals don’t contemplate the complexities of fractional reserve banking. They’re busy living — busy being fathers, mothers, small business proprietors, doctors, carpenters, farmers, teachers, and students. All the roles that keep the world functioning.
Most individuals are simply seeking an enhancement in their daily existence, and it’s our responsibility, as financial specialists, to provide them with what they require.
They need stability and affordability.
Adoption of Infrastructure
As the Bitcoin adoption narrative unfolds, we first attain store of value, then medium of exchange, and finally unit of account — the ultimate challenge! Yet, if we promote stablecoins, are we obstructing Bitcoin from becoming a unit of account? No. Bitcoin will achieve that status if and when the global demand arises, if and when we render it accessible.
Those opting to utilize a stablecoin on the Lightning Network will do so because it is the superior choice for them; it’s the option that offers the highest utility. They aren’t contemplating “adopting Bitcoin,” and they don’t intend to embrace bitcoin, the unit of account. But they will adopt Bitcoin, the network. They will adopt Bitcoin, the payment infrastructure.
We often envisage replacing the Visa network, and to achieve that, we must be more beneficial than Visa, which processes transactions in 175 distinct currencies.
Our Turkish reseller is proficient in his field, yet not an authority on decentralized networking technology. He will select Lightning over Visa when it evolves into the better, more economical, and simpler alternative for operating his business. And for many enterprises, Lightning is already the swifter, more cost-effective alternative.
Let’s envision that hesitant shop owner in Brazil. She’s operating her business making transactions using a stablecoin via a Taproot Assets Lightning wallet. She’s transitioned to Bitcoin infrastructure. She was attracted to do this by a straightforward, easy-to-use mobile wallet that simplified her operations, reduced her expenses, and minimized her risks. This wallet enables her to conduct instantly settled, global, remarkably affordable transactions, and to do so in an extensive range of currencies. She came for the utility of this medium of exchange, but is now just a button away from shedding her hesitant status.
And, should that worldwide fiat money collapse finally happen one fateful Tuesday afternoon, she just has to press that button to switch from fiat to sats because she’s already functioning on Bitcoin infrastructure.
A Multi-Asset Network
The potential and utility of a Taproot Assets-enabled, multi-asset Lightning Network is significantly underestimated. Truly: It’s a medium of exchange like the world has never encountered before.
Application developers and their users can employ any unit of account they prefer — U.S. dollars, Brazilian reais, euros, etc. — all routed through Bitcoin. Taproot Assets Lightning transactions rely on Bitcoin liquidity. These transactions support and expand the Lightning Network and open a multitude of options. A payment can be dispatched by Alice in USD, but Bob can receive BTC. Alice can send an additional payment in USD, routed through the Lightning Network, utilizing the sats-denominated liquidity at the heart of the Lightning Network, onward to Carol who opts to accept a euro-denominated stablecoin.
Our Turkish reseller can sell products to our Brazilian shop owner using a stablecoin. Not only does he interact with businesses globally without friction, but any typical Bitcoiner can transact with either using sats, seamlessly. No necessity to engage with that stablecoin if they don’t choose to.
And it gets even more interesting. Let’s imagine for a moment this scenario…
(https://x.com/MichaelLevin/status/1885402488955662448)
A global, scalable, instantly settled payment network that’s significantly more economical than Visa — a payment network that now provides users the choice to transact in whatever coin they prefer. This is the brilliance of constructing with Bitcoin as a foundation — individuals adopt the network before they even realize it’s Bitcoin.
Conclusion
If we aspire to see Bitcoin as a medium of exchange, if this is what we are creating for, it’s our duty as specialists to provide the people with what they are clearly indicating they need: instantaneous, low-fee, stable-value transactions. In other words, multi-asset Lightning.
Naturally, Taproot Assets is a dynamic protocol. It can and will be utilized for all forms of applications — including use cases that resonate with the American audience who view bitcoin primarily as a long-term investment. Yay, permissionless innovation! With this protocol, we’re facilitating Bitcoin’s transition into its medium of exchange era.
This piece is an article featured in the latest Print edition of Bitcoin Magazine, The Lightning Issue. We’re sharing it here to illustrate the concepts explored throughout the entire issue.
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