Bitcoin, originally designed for simple remittance and payment functions, has seen an increasing demand for additional features like smart contracts, asset issuance, and NFTs. To meet this growing demand, meta protocols have emerged. These protocols extend the ecosystem in a manner similar to Ethereum scaling solutions or Layer 2, but distinguish themselves by using Bitcoin as the main network.

# What is a Bitcoin Meta Protocol?

A Bitcoin meta protocol is built on the Bitcoin blockchain and enables functionalities beyond traditional remittance and payment. It allows for asset issuance, smart contracts, and NFT management while maintaining the security and UTXO (unspent transaction output) structure of Bitcoin. This approach introduces new capabilities without compromising Bitcoin’s existing structure.

# How Does it Differ from Layer 2 Solutions?

Layer 2 operates by processing transactions externally to the main blockchain and then recording the final data back onto the main chain. Notable Layer 2 solutions include Bitcoin’s Lightning Network and Ethereum’s Optimism and Arbitrum. These solutions decrease fees and increase transaction speed, alleviating the congestion on the main blockchain.

In contrast, meta protocols enhance the existing blockchain by adding new functionalities without creating an entirely new blockchain. Examples include Bitcoin-based BRC-20, Taproot Assets, and RGB. These meta protocols add functions such as NFT issuance and asset management to Bitcoin’s base infrastructure, using its existing security and infrastructure.

# Advantages

## Leveraging Existing Infrastructure and Cost Reduction

Meta protocols utilize Bitcoin’s network and security without needing to build a new blockchain, reducing infrastructure costs while enabling complex asset management and transactions.

## Inscription

Meta protocols can use the ‘inscription’ method to record additional data directly onto Bitcoin transactions. This enhances transparency and ownership of assets and NFTs on the Bitcoin network.

## Consistent User Experience

Users can continue utilizing the existing Bitcoin network and wallets, introducing new features seamlessly without a steep learning curve. This consistency benefits both users and developers, making adaptation easier.

# Major Projects in Meta Protocols

Prominent examples of meta protocols include BRC-20, RGB, and Taproot Assets, each offering unique properties.

## BRC-20

BRC-20 is a meta protocol allowing the issuance and trading of fungible tokens on the Bitcoin blockchain, similar to Ethereum’s ERC-20, but implemented using Bitcoin’s straightforward transaction structure.

## RGB Protocol

The RGB protocol supports smart contract functionalities on both the Bitcoin network and the Lightning Network, enabling decentralized finance (DeFi) and stablecoin issuance on Bitcoin.

## Taproot Assets

Taproot Assets, an enhancement of BRC-20, supports features like multi-asset issuance, liquidity pools, and multi-transfer functions. It facilitates complex financial transactions within the Bitcoin ecosystem and supports digital art and NFT trading via integration with ecosystems like TrackCore and Pipe Protocol.

# Outlook

Bitcoin is evolving from a simple store of value to an ecosystem offering innovative features like DeFi and NFTs. Meta protocols are likely to drive this evolution, attracting more applications and users, and positioning Bitcoin at the forefront of the digital finance landscape.