What is Taproot Assets?

Taproot Assets lets someone create a token on Bitcoin and pass it to other people, either on the blockchainBlockchainBitcoin's shared record of every payment since 2009, stored in blocks that each link to the one before — which is what makes it a chain. or through Lightning channels. Lightning Labs, the company led by Elizabeth Stark, announced it in April 2022 under the name Taro and renamed it in 2023. It went live on Bitcoin’s main network in October 2023 and on Lightning in July 2024. StablecoinsStablecoinA token designed to keep a steady value, usually one US dollar, which its issuer promises to buy back. It isn’t bitcoin, and it depends on that issuer. were the main use Lightning Labs had in mind.

A token’s details are not written into the block for anyone to read. They are tucked inside a TaprootTaprootA 2021 upgrade that added Schnorr signatures and addresses starting bc1p, making complex payments cheaper and more private. output, with the same trick Taproot uses to keep unused spending conditions hidden, and the proof of who owns what is passed between owners off the chain. So on a Bitcoin explorer a Taproot Assets transfer looks like an ordinary Taproot payment: the token and its amount don’t show.

Over Lightning, a token payment is swapped into bitcoin at the start, travels through ordinary channels and is swapped back at the end, so the nodes in between handle only bitcoin. In January 2025 Tether said its dollar stablecoin, USDT, would use the protocol on Bitcoin and Lightning.