The question of what Bitcoin is and who it serves invites a multitude of interpretations. As observed on social media platforms, Bitcoin is often described as being for everyone or anyone; it functions as both a store of value and a medium of exchange. An authoritative statement reflects Satoshi’s original vision, portraying Bitcoin as “A Peer-to-Peer Electronic Cash System.”

It is apparent that Bitcoin evolves based on the intentions of its developers and users. If Bitcoin is to be utilized as a store of value or a medium of exchange, proactive efforts must be made to construct the necessary protocols and services.

Furthermore, it poses the critical inquiry of for whom these developments are intended. Are the innovations aimed at American investors seeking long-term gains? Are they catering to shopowners in Brazil? Resellers in Turkey? Software developers in Nigeria?

If the objective is to establish Bitcoin as a medium of exchange, the focus should shift toward the users who will benefit most—this is where Taproot Assets emerges as an essential tool.

Taproot Assets

Taproot Assets provides the means to take desirable assets and units of account and incorporate them into the Bitcoin infrastructure via the Lightning Network. From a technical standpoint, Taproot Assets represents a protocol enabling the minting of assets on the Bitcoin blockchain efficiently, utilizing taproot transactions made feasible by the November 2021 Taproot soft fork activation. This protocol employs client-side validation, operates on an opt-in basis, and does not require any consensus changes. Fungible assets can be exchanged seamlessly on the Lightning Network, with the protocol currently operational on mainnet.

Taproot Assets stands as a flexible protocol, already offering numerous use cases with a primary focus on stablecoins on the Lightning Network.

Given its potential, why is Taproot Assets considered a powerful adoption tool?

Meeting Users Where They Are

Immersion in the Bitcoin ecosystem can often lead to an insular perspective, centered on its benefits, challenges, and solutions. While such passion generates excitement, the real transformation occurs when the Bitcoin landscape is connected to individuals outside of this domain.

It is crucial to acknowledge that the majority of people may not possess the bandwidth to explore monetary theory or economic histories. For many, free time and disposable income are scarce resources. To enable Bitcoin to serve a global audience, it is essential to meet users at their level of familiarity. With available tools and expertise, it is possible to develop user-centric products that address real-world challenges, which resonate not due solely to their Bitcoin affiliation, but because they offer tangible solutions.

Adoption will not arise solely from a deep understanding of economic principles; rather, it will stem from creating innovations of such utility that users are compelled to engage. The true indicators of success lie in the utility provided and the growing user base.

Stablecoins

In the discussion of stablecoins, it is evident that, whether one is in favor or critical of them, they have solidified their position within the market. The invisible hand has validated their relevance.

Consider the following statistics:

In Brazil, nearly 90% of cryptocurrency transactions involve stablecoins, predominantly for payments and remittances.

Tether estimates a user base of 434 million worldwide, with a daily transactional volume of $31 billion USDT. Notably, approximately 13% of the total USDT supply is held by savers who likely belong to emerging markets without alternative access to U.S. dollars.

Tether (USDT) commands a market capitalization of $153 billion, having recorded over $10 trillion in total volume by 2024. USD Coin (USDC) follows closely with a market cap of $61 billion, based on CoinGecko data at the time of analysis.

Utility

The traction gained by stablecoins can largely be attributed to their utility.

A significant portion of the global population lacks the luxury of holding onto assets during downturns, and few desire to dissect the complexities of fractional reserve banking. Most individuals are occupied with the myriad responsibilities of daily life—becoming parents, running small businesses, practicing medicine, and fulfilling various other vital roles. Their primary desire is for an enhancement in their everyday circumstances, and it falls upon financial experts to deliver solutions that cater to this need.

These users seek stability and affordability.

Infrastructure Adoption

As the narrative of Bitcoin adoption unfolds, the initial phases often involve establishing its role as a store of value, progressing to that of a medium of exchange, and ultimately striving for its function as a unit of account. Yet by facilitating stablecoins, does one impede Bitcoin’s journey toward becoming a unit of account? The answer appears to be no. Bitcoin will assume this role contingent upon global necessity and the provision of appropriate infrastructure.

Those opting to utilize stablecoins on the Lightning Network will do so because it represents their most advantageous option—a selection rooted in utility. Their focus may not be on “adopting Bitcoin” or treating it as a unit of account; rather, they will embrace Bitcoin as a network and as a payment infrastructure.

In discussions regarding the potential to supplant the Visa network, it is vital to acknowledge the need to offer superior utility than that provided by Visa, which processes transactions in 175 different currencies.

Consider our Turkish reseller, who excels in his trade but may not be adept at decentralized networking technology. His preference for Lightning over Visa will arise when it becomes the superior, economical option for business operations. Currently, for many businesses, Lightning already represents the faster and more affordable choice.

Envision a Brazilian shopowner transitioning to Bitcoin infrastructure, managing transactions with stablecoins via a Taproot Assets Lightning wallet. Her decision is driven by an intuitive mobile wallet that simplifies operations, reduces expenses, and minimizes risks. By utilizing this wallet, she can execute instant, globally settled transactions at a low cost across diverse currencies. While she initially seeks the utility of this medium of exchange, she finds herself just one step away from potentially realizing her own transition into the Bitcoin ecosystem.

Should the anticipated collapse of global fiat currencies materialize unexpectedly, she has the capacity to seamlessly shift from fiat to Bitcoin, ensuring she is already operating on Bitcoin infrastructure.

A Multi-Asset Network

The potential and utility represented by a Taproot Assets-enabled, multi-asset Lightning Network are frequently understated. In truth, it introduces a medium of exchange unlike any previously experienced.

Application developers and users can choose any unit of account—USD, Brazilian reais, euros, etc.—with all transfers converging through Bitcoin. Transactions utilizing Taproot Assets Lightning require Bitcoin liquidity, thereby supporting and enriching the Lightning Network while broadening the range of possibilities. For instance, a payment made by Alice in USD may be received by Bob in BTC, with another USD transaction processed via the Lightning Network and subsequently routed to Carol, who prefers a euro-denominated stablecoin.

Furthermore, our Turkish reseller can conduct transactions with the Brazilian shopowner utilizing stablecoins. This arrangement not only facilitates seamless worldwide transactions but also enables everyday Bitcoin users to transact with either party using Bitcoin, if preferred.

Consider this scenario…

(https://x.com/MichaelLevin/status/1885402488955662448)

A comprehensive, scalable, instant payment network that significantly undercuts Visa’s costs—providing users with the flexibility to transact through any preferred currency. The brilliance of utilizing Bitcoin as foundational infrastructure allows users to embrace the network before fully realizing its association with Bitcoin.

Conclusion

If the aspiration is to position Bitcoin as a medium of exchange, it is imperative for experts in the field to respond to the clear demands of users: instant, low-fee, stable-value transactions. In essence, the focus should shift toward multi-asset Lightning.

Additionally, it is important to recognize that Taproot Assets serves as a versatile protocol with the potential for diverse applications, including those appealing to audiences primarily interested in Bitcoin as a long-term investment. This paradigm of permissionless innovation will facilitate Bitcoin’s transition into its era as a medium of exchange.

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