Original author: Haotian (X: @tmel0211)
Editor's note: Recently, the revival of the Ordinals track and the sharp rise of related BRC20 tokens have once again brought attention to the Bitcoin ecosystem. Cryptocurrency researcher Haotian has discussed the narrative of Taproot Assets and Ordinals. The following is a summary by Odaily Planet Daily:
Ordinals assets are easy to distribute but difficult to grab, while Taproot Assets do not require grabbing but are difficult to distribute. BRC20 is rarely discussed. Why is that? Because it is understood that BRC20 essentially belongs to the realm of market speculation, with no technical components. If you think I am biased against BRC20, I believe it is actually your lack of respect for Bitcoin's UTXO technology.
I understand the existence of market shilling behavior, but it does not necessarily have to be based on confusing rhetoric.
How to view the narrative of Taproot Assets and Ordinals? In simple terms: Ordinals assets are easy to distribute but difficult to grab, while Taproot Assets do not require grabbing but are difficult to distribute.
Ordinals BRC20
Ordinals are third-party data indexes, and the deployment, minting, and transfer of tokens rely entirely on users publishing specific data fields on the chain. Ordinals can only interpret the "legitimacy" based on decentralized data retrieval.
The advantages are:
1) Naturally possess the characteristic of fair emission, allowing users to participate in asset circulation by directly sending transaction remarks with specific parameters to the chain;
2) Easy to Fomo speculate, as some people can take advantage of market sentiment differentials;
3) Aligns with the interests of miners, as overall mining fees will increase under Fomo sentiment.
The disadvantages are:
1) Fair emission is just a concept switch. For assets with real growth, it is difficult to participate in early minting or low-price accumulation;
2) Fomo speculation may lead to significant losses for most retail investors who are unable to mint assets;
3) Susceptible to market manipulation, as whales can deploy a token at any time and then gain traffic and followers through price manipulation.
If we were to discuss technical logic, you would find a host of bugs, such as: it is easy to encounter reconciliation errors between Ordinals index ledgers and exchange platform ledgers when depositing or withdrawing BRC20 assets, which can lead to false deposit attacks; or technically, it is entirely possible to monitor Mempool data in real time to obstruct the deployment of BRC20, disrupting the fairness of token issuance; or there may be logical errors in accounting between Ordinals indexes and some proxy service platforms, disrupting the order of asset circulation.
In summary, due to the "delay" effect of on-chain block confirmation, Ordinals-related tokens cannot have clear state segmentation like Ethereum smart contract tokens, and can only manage assets through multiple platform accounting and reconciliation. Once the circulation environment of assets becomes complex, various problems will arise.
I do not have bias against BRC20; it is just that it does not belong to the realm of technical logic, and should be understood purely within the realm of market speculation. Using the so-called advantage of technology to shill something based purely on market logic, one can see the tinge of leek green above your head from thousands of meters away.
Taproot Assets
Taproot Assets are based on Bitcoin's multi-signature and hash time lock to issue assets, and utilize the Lightning Network's trust channels for large-scale asset distribution and circulation. The entire process is settled by the Bitcoin mainnet, with the Lightning Network serving as a trusted off-chain link developed over many years, and also having a strong consensus foundation, similar to a layer2 Bitcoin scaling solution.
Although it makes more sense technically and is based on the distribution of tokens through Lightning Network wallets and relay nodes, it can generate consumption and bring long-term practical value to Bitcoin. However, the issuance model of Taproot Assets is similar to ICO, making it easy to issue but difficult to operate and distribute, requiring the project to have strong comprehensive capabilities in technology, operations, and marketing.
1) Asset circulation can only occur after establishing initialization channels;
2) Channel capacity is limited, and to scale up, channel capacity must be increased;
3) Distribution efficiency is limited, and there are also throughput limitations for asset transfers within channels. Moreover, users are not yet accustomed to using the Lightning Network for asset interaction.
This means that Taproot Assets are unlikely to have short-term Fomo effects.
Many people are unaware that there are already over 40,000 types of assets issued on Taproot Assets, including tokens and NFTs. However, these tokens do not have a first-mover advantage in issuance. Anyone can issue Sats, but the real competition lies in the ability for continuous operation and growth. This clearly resembles a burgeoning new era of Bitcoin ICO. 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 holds promise as the mainstream track for "stable coins," activating a brand-new narrative wave of Bitcoin applications. It can be compared to Ethereum's issuance to DEX, CEX token distribution, and full-level agency distribution mechanism. Let's observe the development of Taproot Assets.
In general, for short-term speculation, BRC20 may be more appealing, but one must be wary of those who preach long-term value along the speculative path. For long-term value discovery, do not miss out on Taproot Assets. However, do not expect too much in the short term, or else you will also be exploited by speculators.
Wise readers, if you can understand this logic, each go your own way, and refrain from dissing and confusing each other.
Let "them" see clearly before making a choice.
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