Revealing the secrets of BRC20 and Taproot Assets: short-term speculation or technological innovation?

Haotian

2023-11-08 15:25

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Original author: Haotian (twitter: @tmel0211)

Editor's note: Recently, the concept of BRC20 inscriptions has been hot, and the related inscription prices have skyrocketed, which has also led to the community's attention to BTC-related tracks. Cryptocurrency researcher Haotian shared his views on Taproot Assets and Ordinals Assets. Are they short-term speculation or have long-term value?

Ordinals assets are easy to distribute but difficult to grab, while Taproot assets are not difficult to grab but difficult to distribute. Brc20 is rarely discussed. Why? Because it is essentially a market speculation category with no technical components. If you think I am biased against Brc20, I think it is actually because you lack respect for Bitcoin's UTXO technology.

I understand the existence of shilling behavior in the market, but it doesn't necessarily have to be based on the premise of confusing and misleading.

How do you view the multi-asset narrative of Taproot Assets and Ordinals in the encryption industry? Simply put, Ordinals assets are easy to distribute but difficult to seize, while Taproot Assets do not require seizing but are difficult to distribute.

Ordinals BRC20

Ordinals is a third-party data indexing index in the encryption industry. The deployment, minting, transfer, and other actions of tokens rely entirely on users publishing specific data fields to the chain. Ordinals can only interpret "legitimacy" based on decentralized data retrieval.

Benefits:

1) Naturally possesses fair launch characteristics, users can participate in asset circulation by directly sending transaction remarks with specific parameters to the chain.

2) Easy Fomo speculation, some people with information and cognitive gaps can make a lot of money by taking advantage of market sentiment;

3) In line with the interests of miners, overall miner fees will be raised under Fomo sentiment.

坏处是： (The downside is:)

1) Fair launch is just a concept switch. It is difficult for you to participate in the early minting or low-price fundraising stages of assets that truly have growth potential.

2) Fomo may cause significant losses of assets for most novice retail investors who are unable to mint assets.

3) Market manipulation is easy, and dark pools can deploy a token at any time, then rely on pumping to gain traffic and followers.

If you insist on discussing technical logic, you will find a bunch of bugs, such as: when depositing and withdrawing Brc20 assets to and from exchanges, it is easy to encounter errors in reconciling Ordinals index ledger and exchange platform ledger, which can lead to false recharge attacks; or, technically, it is entirely possible to monitor Mempool data in real-time to block Brc20's Deploy behavior and interfere with the fairness of token issuance; or, there may also be errors in accounting logic between Ordinals index and some proxy service platforms, which can disrupt the order of asset circulation.

In short, due to the "delay" effect of on-chain block confirmation, Ordinals-related tokens cannot have a clear state segmentation like Ethereum smart contract tokens. They can only be managed through multiple platform accounting and reconciliation methods. Once the asset circulation environment becomes complex, various problems will arise.

I have no prejudice against Brc20, it is just not a product within the scope of technical logic, and it should be understood based on the market speculation category. Using the so-called technical advantages to shill something that is purely based on market logic, you can see the hint of "chives green" above your head from thousands of kilometers away.

Taproot Assets

is an asset issuance platform based on Bitcoin's multi-signature and hash time lock, and utilizes the trust channel of the Lightning Network for large-scale distribution and circulation of assets. The entire process is settled on the Bitcoin mainnet, while the Lightning Network, as a trusted off-chain link developed for many years, also has a strong consensus foundation, serving as a layer2-like scaling solution for Bitcoin.

Although the technical aspect makes more sense and based on the Lightning Network wallet and relay node to distribute tokens, it can generate consumption and bring long-term practical value to Bitcoin. However, the Taproot Assets issuance model is similar to ICO, which makes it easy to issue tokens but difficult to operate and distribute them later. The project team needs to have strong comprehensive capabilities in technology, operation, marketing, and other aspects.

1) Only by establishing an initialization channel in advance can assets be circulated.

2) Channel capacity is limited, and to expand the scale, the channel size must be increased.

3) The distribution efficiency is limited, and there are also throughput limitations for asset transfers within channels. Moreover, users have not yet become accustomed to using the Lightning Network for asset interactions.

This determines that Taproot Assets is unlikely to have short-term Fomo effect.

Many people are unaware that over 40,000 assets have already been released on Taproot Assets, including tokens and NFTs. However, these tokens do not have the advantage of being issued early. Anyone can issue Sats, but the key is to choose who to trust and whose narrative to believe in. Ultimately, it's about the ability to sustain growth and operations. This is reminiscent of the early days of Bitcoin ICOs, but the question is, what kind of story should be told?

Fortunately, the narrative of Taproot Assets has just begun and has not been led astray. It still sees its potential as the mainstream track for "stablecoins" and activates a new wave of Bitcoin application narratives. It can be compared to Ethereum's issuance of tokens to DEX, CEX, and the distribution of tokens at all levels of circulation through agency distribution mechanisms. Let's take a look at the development of Taproot Assets.

Generally speaking, if you are looking for short-term speculation, BRC20 may be a better option. However, you should be wary of people who try to convince you of the long-term value of your investment. If you are interested in long-term value, don't miss out on Taproot Assets. But don't expect too much in the short term, or you may fall prey to speculators.

Smart viewers, if you can understand this logic, please go your own way and stop dissing and confusing each other.

Let "them" see clearly and then make a choice.