Stablecoins Coming to Bitcoin’s Lightning Network, CEO Elizabeth Stark

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Lightning Labs is making headway in introducing stablecoins to the Bitcoin network. This advancement comes through the utilisation of Bitcoin’s Taproot upgrade, which was rolled out in late 2021. Elizabeth Stark, CEO of Lightning Labs, shared these insights during her presentation at FT Live’s Crypto and Digital Assets Summit in London.

At the summit, Stark explained the progress made by her team in integrating stablecoins with Bitcoin’s infrastructure. The team at Lightning Labs has successfully tested transactions using their new Taproot assets protocol. “We released an early part of the code in October and recently demoed the first-ever transaction on Lightning of an asset. The idea is to have crypto dollars and stablecoins on the Bitcoin blockchain,” Stark stated.

The introduction of stablecoins to Bitcoin is poised to address issues such as high transaction fees experienced on other blockchains. Stark emphasised Bitcoin’s robust security and decentralization as key factors that make it an ideal platform for stablecoin integration.

Stark also discussed the rising importance of stablecoins as a store of value, especially in countries facing inflationary pressures. Since the COVID-19 pandemic, stablecoin adoption has surged, particularly in emerging markets. “The stickiest users have been those looking for a stable store of value,” Stark noted, highlighting the usage of Bitcoin and stablecoins interchangeably depending on user needs.

The potential of Bitcoin’s network to lower transaction costs significantly compared to traditional financial systems was another focal point of Stark’s discussion. She highlighted the cost-effectiveness of using the Lightning Network for transactions, “If you look at Visa where fees in the U.S. can be upward of 3%, or even 1%, the fees, transacting with stablecoins on Lightning can be dramatically lower, a cent or less than that.”

Stark’s insights underline a strategic shift towards using the Bitcoin blockchain not just for cryptocurrency transactions but also for the broader issuance of stablecoins and tokenized real-world assets.

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