BRC20 vs Taproot Assets: A Discussion on Multi-Asset Narratives
In simple terms, Ordinals assets are easy to distribute but hard to grab, while Taproot Assets are not hard to grab but difficult to distribute.Original author: Haotian (twitter: @tmel0211)
Brc20 is rarely discussed. Why? Because it is fundamentally a category of market speculation, with no technical components to speak of. If you think I have a bias against Brc20, I believe it is you who 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 confusion.
How should we view the multi-asset narrative of Taproot Assets and Ordinals? Simply put: Ordinals assets are easy to distribute but hard to grab, while Taproot Assets are not hard to grab but difficult to distribute.
Ordinals BRC20
Ordinals is a third-party data index; the behaviors of token deployment, minting, and transferring rely entirely on users publishing specific data fields on-chain. Ordinals can only provide "legitimacy" interpretations based on decentralized data retrieval.
The benefits are: 1. It naturally possesses fair launch characteristics, allowing users to participate in asset circulation by directly sending transactions with specific parameters; 2. It is easy to Fomo speculate, where some people with information and cognitive advantages can profit immensely from market sentiment; 3. It aligns with miners' interests, as overall miner fees will be driven up under Fomo sentiment.
The downsides are: 1. Fair launch is merely a conceptual sleight of hand; for truly growing assets, it is difficult to participate in early minting or low-price accumulation; 2. When Fomo hits, most novice retail investors may lose a significant amount of assets without minting any; 3. It is susceptible to market manipulation, as dark pools can deploy a token at any time and then pump it to gain traffic and followers.
If we must discuss technical logic, you'll find a host of bugs. For example, when depositing or withdrawing Brc20 assets on exchanges, it is easy to encounter discrepancies between the Ordinals index ledger and the exchange platform ledger, leading to false deposit attacks. Additionally, it is technically feasible to monitor Mempool data in real-time to obstruct Brc20 deployment actions, interfering with the fairness of token issuance. There may also be accounting logic errors between the Ordinals index and some proxy service platforms, disrupting the order of asset circulation.
In summary, due to the "delay" effect of on-chain block confirmations, Ordinals-related tokens cannot have clear state segmentation like Ethereum smart contract tokens; they can only be managed through accounting reconciliation across multiple platforms. Once the asset circulation environment becomes complex, various problems will follow.
I do not have a bias against Brc20; it simply does not belong to the realm of technical logic. Understanding it solely within the context of market speculation is sufficient. Using so-called technical advantages to shill something that is purely market logic, one can see the green of retail investors from thousands of meters away.
Taproot Assets
Taproot Assets are based on Bitcoin's multi-signature and hash time lock for asset issuance, utilizing the Lightning Network's trust channels for large-scale distribution and circulation. The entire process is settled on the Bitcoin mainnet, while the Lightning Network, having developed for many years as a trusted off-chain component, also has strong consensus support, functioning as a layer 2 Bitcoin scaling solution.
Although the technical aspect makes more sense, and distributing tokens via Lightning Network wallets and relay nodes can create consumption, bringing long-term application value to Bitcoin, the Taproot Assets issuance model is similar to ICOs; issuing tokens is easy, but subsequent operation and distribution are challenging, requiring the project team to have strong technical, operational, and market capabilities.
Assets can only circulate if initialization channels are established in advance;
Channel capacity is limited; each channel has a finite capacity, and to scale, the channel size must be increased;
Distribution efficiency is limited; asset transfers within channels also face throughput limitations, and moreover, users are not yet accustomed to using the Lightning Network for asset interactions. This determines that Taproot Assets are unlikely to experience short-term Fomo effects.
Many people do not know that over 40,000 assets have already been issued on Taproot Assets, including tokens and NFTs. However, these tokens do not have a first-mover advantage simply because they were issued early; anyone can issue Sats, but choosing whose narrative to believe and whose vehicle to board ultimately comes down to sustained operational growth capability. This clearly resembles a nascent new Bitcoin ICO era, but what story should be told?
Fortunately, the narrative of Taproot Assets has just begun and has not yet been swayed off course. It still holds promise as a mainstream track for "stablecoins," activating a new wave of Bitcoin application narratives. It can be compared to Ethereum's token issuance to DEX and CEX token distribution mechanisms.
In summary, for short-term speculation, BRC20 may seem more appealing, but one must be cautious of those who preach long-term value on the speculative path. Long-term value discovery should not overlook Taproot Assets, but do not set expectations too high in the short term, or you may also be exploited by speculators.
Smart readers can understand this layer of logic, each walking their own path, and stop dissing and confusing each other.
Let "them" see clearly before making a choice.
