Taproot Assets Learning Center


Welcome to our learning center! Here you’ll find everything we learned to understand what are Taproot Assets. In this introduction page, we start with the basics of basics.

What is Bitcoin?

Bitcoin is a form of digital cash that eliminates the need for central authorities such as banks or governments or any central authority. This means money flows directly from the sender to the receiver, and it is never held or controlled by a third party in between.

Nobody independently owns or controls Bitcoin, so everyone can participate in the network and no one can stop, forbid or erase any transaction. You are sovereign on your Bitcoin, nobody can set any limit on what you can do with the bitcoins you own.

Bitcoin’s Monetary Policy is also independent as the total bitcoin’s supply has been limited to 21 million Bitcoins. New Bitcoins are created approximately every 10 minutes (Right now there is almost 18 million Bitcoin in circulation).

What is Lighting network?

Bitcoin’s blockchain can only process an average of 7 transactions per second and, for several excellent reasons, it would not be a good idea to raise the number of transactions stored every 10 minutes. Just imagine the costs of storing 150 million transactions per day like visa does…

The Lightning Network is a second-layer protocol designed to enable Bitcoin transactions which are not recorded on the blockchain. Because they are not recorded on the blockchain, and thus require no mining, Lightning payments are extremely fast and cheap.

Alice, Bob and Carole are brothers and sisters. They often refund each other (restaurants, presents, loans…). Using Bitcoin for this would be a terrible idea as, for each transaction, they will have to pay high fees. Lighting network has been invented for cases like this one! this is a very simple and very incomplete explanation of how it works:

  • Alice, Bob and Carole will create a bitcoin transaction to lock some bitcoins.
  • Alice creates a transaction to refund Carole for the parent’s present she bought and give it to Carole.
  • Bob creates a transaction to refund Carole for the parent’s present she bought and give it to Carole.
  • Alice creates a transaction to refund Bob for the Carole’s present he bought.
  • They can do that as long as they want… transactions are never sent the blockchain.

With the lighting network, the balance of Alice, Bob and Carole evolve off-chain with each transaction they exchange privately. At any moment, anyone can publish a closing transaction to write in the blockchain the final balance of Alice, Bob and Carole.

What is Taproot?

Taproot (BIP 340) is an upgrade to Bitcoin which brought several new features (Schnorr Signatures, Taproot & Tapscript).

Schnorr Signatures allows key aggregation. When multiple parties want to sign the same message, they must each include their public key and signature. Schnorr public keys and signature can be aggregated such that, if three parties want to sign a transaction, they can combine their three public keys to form a single public key. They can combine their three signatures to form a single signature which is valid for the aggregate public key. A verifier must only verify a single signature and public key in order to be sure that all three parties signed the message.

Taproot (BIP 341) defines how Bitcoin’s protocol integrates Schnorr signatures, and it includes Merkelized Alternative Script Trees (MAST) which allow users to lock outputs to multiple scripts. Instead of having many scripts to lock a transaction, the transaction is locked to the Merkle root of these scripts. To unlock the transaction, the spender must reveal the script which they are using to unlock the bitcoins, as well as proof that this script is included in the Merkle root of the previous transaction.

Tapscript (BIP 342) adds and updates several opcodes. These new scripts are used to verify Taproot spends and Schnorr signatures, and they are collectively known as Tapscript.

What are Taproot Assets?

Taproot Assets is a protocol that allows people to issue digital assets on the Bitcoin blockchain (like a stable coin or an NFT). Those assets can be transferred with a classical Bitcoin transaction, or an off-chain transaction over the Lightning Network.

Since Taproot, you can lock an UTXO within a tree structure called the ’tapScript branch’. You don’t store the tree in the transaction but only the hash of the tree merkel root. So you can create complexe scripts without writing them in the blockchain and without revealing them!

With Taproot Assets, we use that tree structure to let developers embed arbitrary asset metadata (asset script hash, amount, metadata….) and that tree structure merkel root hash only has to be stored into an existing transaction output to make it available !

Assets issued with Taproot Assets can be deposited into Lightning Network channels, where nodes can offer atomic conversions from Bitcoin to Taproot Assets.