Bitcoin stablecoins are coming closer to reality thanks to new functionality developed by Lightning Labs using the network’s Taproot upgrade. Elizabeth Stark, CEO of Lightning Labs, highlighted this development at FT Live’s Crypto and Digital Assets summit in London. She also provided an informative explanation of Bitcoin and the Lightning Network to a traditional finance audience. The Taproot Assets protocol by Lightning Labs aims to bring stablecoins and tokenized assets to Bitcoin, and significant progress has been made, including the testing of transactions on Lightning. Stark emphasized that Bitcoin’s network is well-suited for stablecoin use due to its security and decentralization. She also discussed the value of Bitcoin and stablecoins as a store of value, particularly in countries with inflation and devaluing fiat currencies. Stark noted that stablecoin adoption has increased significantly during the COVID-19 pandemic, especially in emerging markets. She highlighted that stablecoins like Tether and Circle hold more US Treasury bonds than major nations like Germany and South Korea, despite end users not benefiting from the interest. The choice to hold stablecoins is driven by the need for a store of value in countries with hyperinflation or unstable economies. Stark emphasized the need for infrastructure to enable the issuance of stablecoins and real-world assets on the Bitcoin blockchain, which is why Lightning Labs is building this protocol. Financial institutions could issue assets like gold, stablecoins, and fiat-backed assets on Bitcoin and transact over the Lightning Network. Importantly, the cost of transacting on Bitcoin is much lower compared to other blockchains and traditional financial systems. This competitive advantage could enable global transactions at significantly lower rates than traditional networks.
Lightning Labs CEO hints at imminent arrival of Bitcoin-backed stablecoins