Lightning Labs Close to Enabling Stablecoins on Bitcoin Network: A Game Changer for Global Transactions
Summary:
Bitcoin is on the verge of supporting stablecoins, thanks to new functionalities developed by Lightning Labs using the network's Taproot upgrade. Lightning Labs is developing the Taproot Assets protocol to facilitate stablecoins and tokenized assets on Bitcoin. Lightning Labs' CEO, Elizabeth Stark, believes that Bitcoin's network is decentralized and secure, making it a perfect solution for stablecoin use. Stark acknowledges Bitcoin (BTC) and stablecoins as key stores of value, notably in countries grappling with inflation and devaluing currencies. Offering lower costs compared to traditional methods, Bitcoin could soon allow financial institutions to issue gold assets, stablecoins, and other fiat-backed assets.
With the assistance of Lightning Labs and the network's Taproot upgrade, Bitcoin is inches away from supporting stablecoins. Elizabeth Stark, the head of Lightning Labs, divulged the company's newest strides at the Crypto and Digital Assets summit hosted by FT Live in London. Stark, one of the company's founders, also spoke candidly about Bitcoin and the Lightning Network to the traditional finance participants.
Lightning Labs is developing a protocol named Taproot Assets to enable the existence of stablecoins and tokenized assets on Bitcoin. Developers have made significant progress towards this objective, resulting in the trial of transactions on Lightning, according to Stark.
"In October we revealed a portion of the code, and have just shown a successful transaction on Lightning carrying an asset. We aim to incorporate crypto dollars and stablecoins on the Bitcoin blockchain," Stark stated.
Stark pointed out the traditionally, these virtual assets have been used on different blockchains plagued by high costs and other problems. She believes that Bitcoin's network could be the ideal solution for stablecoin use due to its decentralized and secure nature.
The head of Lightning Labs also highlighted the significance of Bitcoin (BTC) and stablecoins as a useful store of value, particularly in countries dealing with a depreciating fiat currency and inflation concerns.
According to Stark, since the outbreak of COVID-19, stablecoin adoption has soared, particularly in emerging markets. "Users who need a reliable store of value have shown the most loyalty, with some using Bitcoin, others using stablecoins and a mixture of both for some," Stark noted.
Tether (USDT) and Circle (USDC), the two key stablecoin operators, collectively possess more U.S. Treasury bonds than major nations like Germany and South Korea. Interestingly, the interest accrued from holding stablecoins does not benefit the final users, Stark pointed out. Those living in nations with hyperinflation or unstable economies choose to hold stablecoins simply for their value-storage function.
In terms of the burgeoning stablecoin market value, Stark stated the need for an infrastructure to facilitate the issuing of stablecoins and real-world assets on Bitcoin's blockchain.
Accordingly, Lightning Labs is in the process of creating this technology which asset issuers can use to launch real-world tokenized assets. Stark additionally discussed that financial establishments could release gold assets, stablecoins, and other fiat-backed assets on Bitcoin and subsequently operate them over the Lightning Network.
Stark equally highlighted the relatively low cost in comparison to other blockchains and traditional finance systems, stating, "Looking at Visa where fees in the U.S. can exceed 3% or even 1% of the fees, executing transactions with stablecoins on Lightning could cost significantly less, even under a cent."
Accordingly, she said, transactions could be made worldwide at a fraction of the cost of traditional networks, thus fostering a viable competitive environment.
Published At
5/9/2024 1:38:24 PM
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