Good Morning Everyone,
Taro which stands for Taproot Asset Representation Overlay is a brand new bitcoin improvement proposal, or BIP. It is a protocol designed to enable low-fee multi-asset transfers via the bitcoin and lightning network.
Lightning Labs have developed this new protocol and have raised $70m in order to help bring Taro to life.
I realise most of you are non-technical, so i’ll spare you the complex details. If you want to get a more detailed understanding, i’d direct you to this post from @roasbeef - the developer of the protocol.
What i think is most critical to understand here is:
1)This new capability is enabled by the Taproot upgrade. This upgrade only happened in November of last year (14/11/21). Only some four months later we have a major BIP proposal. It’s insane how quickly taproot has been utilised to build on top of bitcoin and this is unlikely to be the last!
2) As a result this has the potential to completely change the game bringing non-custodial assets to bitcoin, while maintaining the inherent security, decentralization and other fundamental properties of the network. This is absolutely massive. The current system does not allow you take custody of almost anything. If you want to hold stocks, bonds etc they need to be held with regulated 3rd parties. Taro has the potential to completely change this model.
3) This is completely open-source. Made in the open and for anyone to view, verify or modify to build on top of. I think the wave of open-source development that is being ushered in as a result of bitcoin generally is way under-appreciated.
4) Most people still have no idea about lightning, let alone taproot or Taro.
5) This should help offer some perspective as to how insanely early we still are in the life of this thing as demonstrated by this post from Allen Farrington yesterday from the bitcoin conference which is going on right now in Miami.
It’s important to note that this Taro protocol has not been implemented yet. It will undergo somewhat of a peer review process by core devs and as with everything in bitcoin this process will take some time to ensure t’s are crossed and i’s are dotted.
We have witnessed the birth of open-source money, a brand new kind of truly neutral money for the world, and now we’re seeing it grow up in real time. It’s impossible to know how things will evolve from here, but you have to just take a moment to sit back and marvel at the significance of what is actually taking place.
How often does a new money come into existence? It is truly incredible to be alive to witness this, and even more so when you consider how few people really grasp the significance of it.
The asymmetry that exists in respect to bitcoin has simply never been greater in my opinion.
Hope you have a great day. I’ll talk to you tomorrow.
AK
