Taro protocol by Lightning Labs will “Bitcoinise the Dollar”

What 

Lightning Labs, the creators of the Lightning Network, has raised a further $70 million in a Series B funding round to continue work on a protocol that will enable users to transact with stablecoins and other digital assets on the Bitcoin network. The protocol, called Taro, will run on the Lightning Network

Why

Taro will make it possible to send cross-border payments with stablecoins and other digital currencies on the Lightning Network almost instantly and at a very low cost

What next 

This latest development by Lightning Labs further cements Bitcoin’s role as a notable future player in the global payments system. Taro on Lightning will be able to facilitate hundreds of thousands of transactions per second, which should get the attention of traditional payments providers, including the likes of Visa

The story 

Taro is named after the taro root and is a reference to the Taproot upgrade that was activated on the Bitcoin network in November last year. The improvements to the network contained in Taproot made it possible for developers at Lightning Labs to create the Taro protocol. 

With Taro, developers can issue digital assets on the Bitcoin blockchain and shift these assets onto the Lightning network for speed and scalability. 

“We see Taro as an important step in Bitcoinising the Dollar,” said Ryan Gentry, Business Development Lead at Lightning Labs. The protocol, still in development, will combine the security of the Bitcoin blockchain with the speed and efficiency of the Lightning Network to offer users a decentralised payments network on the “fastest globally payments network with the lowest fees,” Gentry noted.  

Most of the communications from the Lightning Labs team have been around Taro facilitating fiat-linked stablecoin transactions, but broad reference has also been made to digital assets and digital versions of fiat currencies. Forbes reported that Taro may in future be able to facilitate various kinds of digital assets, including NFTs, which would make Taro a serious threat to other protocols and their native coins. Lightning Labs was, however, quick to add that it was not currently working on integrating these assets into the Bitcoin network. 

In practice, Taro allows unbanked people to send remittances and make other payments wherever they are in the world, without having to open a bank account, and they can do this almost instantly and cheaply. 

A big focus of the company is tapping into the trend of Bitcoin adoption in emerging markets. “The potential here is for all the world’s currencies to route through Bitcoin over the Lightning Network,” Elizabeth Stark, CEO and co-founder of Lightning Labs, told Forbes. 

The Lightning Network saw explosive growth in users, especially in Latin America and West Africa. “We’ve continually heard from people, developers and startups in emerging markets that adding stablecoin assets to Lightning would expand financial access for their communities,” Gentry explained. 

Stark explains in a post on Medium that all people need to transact on the Lightning network is access to an internet-connected mobile phone. “We can enable them to leapfrog the legacy financial system for something that is far superior — open, global, and interoperable,” she says. 

“This is what most people get wrong about Bitcoin,” Stark tweeted in February last year. “It’s an interoperable protocol of value for internet transactions. It can be a medium of exchange without being a unit of account. Many users in the future will be using Bitcoin without even knowing it.”

To learn more about Bitcoin and cryptocurrency, check out our learning portal here.