Bitcoin's Evolution: From Digital Currency to Multi-Asset Network
Summary:
This article discusses the transformation of Bitcoin's utility beyond just a digital currency and store of value. It highlights the introduction and advancement of new protocols such as 'Ordinals' which allows permanent inscription of any file into the Bitcoin blockchain, and 'Taproot Assets (TARO)' which advances Bitcoin's functionality as a multi-asset network. The article also discusses the future potential of these developments in attracting not only more developers but also new users to Bitcoin.
Bitcoin (BTC), recognized as a decentralized digital currency and store of worth for over ten years, is undergoing a considerable transformation in its purpose. One of the most frequently discussed issues in the Bitcoin community since early 2023 is the blockchain's use for purposes beyond its traditional roles.
Since January 2023, attention has been drawn to the newly introduced 'Ordinals' protocol, developed by Casey Rodamor. This protocol allows users to embed any file into the Bitcoin blockchain, permanently. Although not a pioneering idea, Ordinals gained notable traction, becoming a popular tool for etching myriad content on the Bitcoin blockchain - everything from NFT collections, music, video games, journalistic articles to WikiLeaks records.
Ordinals is not even a year old and has undergone significant advancements, enabling more sophisticated usages. One such improvement is the recursive inscriptions technique that circumvents a 4-megabyte per block storage limit, permitting the insertion of larger data into the Bitcoin blockchain. Through a series of recursive inscriptions, an entire article from Cointelegraph was etched onto the Bitcoin blockchain. Adding credibility to this innovative technique, Leonidas, a developer from the Ordinals community, highlighted the possibility of using the Bitcoin blockchain as a giant repository of code packages for developers.
The unfolding exploration of Bitcoin's functionality continues to expand. Lightning Labs unveiled the first mainnet release of Taproot Assets (TARO) in October 2023, further augmenting Bitcoin's functionality as a multi-asset network. The release syncs perfectly with the excitement surrounding the progress of the Ordinals protocol, allowing TARO to shine alongside it. Bitcoin is now seen as a network comprising myriad assets, thanks to the influencing force of the Ordinals Protocol.
The new TARO protocol brought along enticing applications, one of which is the potential to issue stablecoins via the Bitcoin blockchain. A remarkable shift in usage is underway, where Bitcoin, traditionally an exchangeable asset, is becoming the medium for exchange. Successful use cases from other chains can be brought back to the 'mothership' through this type of development.
All things considered, we appear to be on the brink of a new Bitcoin paradigm - the age of the multi-asset orange network. The new protocols have the potential not only to appeal to developers, but also to attract and retain new users who didn't see Bitcoin's inherent value. The continuous advancements in Ordinals further open up a world of possibilities.
As Hal Finney, an iconic cypherpunk and the first receiver of a transaction from Bitcoin's creator, Satoshi Nakamoto, anticipated in 1993, we are now "buying and selling cryptographic trading cards." Bitcoin continues to evolve and transform under the spotlight as we step into the future.
Lugui Tillier serves as the Chief Commercial Officer at Lumx Studios, a Web3 studio funded by BTG Pactual Bank - Latin America's largest investment bank - among other investors. Tillier holds investments associated with the Ordinals Protocol but doesn't mention any specific investments in this article. This publication should not be taken as any form of legal or investment advice; it is for informational purposes only. It represents the author's views alone and doesn't necessarily mirror the views and opinions of Cointelegraph.
Published At
10/26/2023 8:51:00 PM
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