A Bitcoin-based stablecoin will challenge its competitors in speed and cost, which are huge competitive advantages for Bitcoin. A cryptocurrency investment firm, Coinshares, predicted that in 2024, a Bitcoin-based stablecoin will emerge, challenging competitors in speed and cost. According to the firm’s analysts, Christopher Bendiksen and Matthew Kimmel, the forecast is described in the latest outlook report by CoinShares, published on Jan 22.
🔵 Our ‘24 Outlook is out!
Our researchers take you through their key highlights.
— CoinShares (@CoinSharesCo) January 22, 2024
Furthermore, the analysts expect this could make Bitcoin stablecoin easily available for users within the next year, thereby giving a much-needed platform in the current stablecoin universe. They argue that the BTC blockchain has an extensive history, exceptional stability, minimal technical debt, and robust assurances, making it an ideal platform for stablecoins.
If successfully implemented, such a stablecoin could outcompete not only in speed and cost but also inherit the inherent stability that Bitcoin infrastructure carries. Despite previous attempts at Bitcoin-based stablecoins, Bendiksen and Kimmel foresee tangible development projects emerging as accessible tools in 2024.
They envision a scenario where businesses and BTC plugins progressively integrate stablecoin spending, thereby contributing to the continued growth of stablecoin usage. This, in turn, could fortify Bitcoin’s monetary properties and enhance its resistance to censorship.
However, the analysts acknowledge existing technical barriers. They note historical trends indicating stablecoin users prefer platforms offering lower transaction costs and higher speed, posing a challenge for Bitcoin’s inherent architectural design.
Prospects and Hurdles for Bitcoin-Based Stablecoins
While that holds, several BTC infrastructure firms like Stacks, RSK, and Liquid Network have already launched their stablecoins on the second layer of Bitcoin, per the report. Notable among these include USDA and other USD-denominated stablecoins like Dollar on Chain (DoC), rDAI, and the Liquid-based Tether (L-USDt).
Trust Machines suggests that today, stablecoins are based on the second layer of Bitcoin, but they can shift to its base layer in perspective. Moreover, some firms exploring this possibility are bitSmiley Labs, backed by cryptocurrency exchange OKX’s venture capital arm, aiming to release a stablecoin in “bitRC20 format” on the Bitcoin blockchain.
stablecoins on #bitcoin are a necessary ingredient to unlocking true DeFi on BTC that is 100% inevitable@bitsmiley_labs, with funding from @OKX_Ventures and @ABCDELabs, is releasing bitUSD very soon and about to save the game like a memory card
don’t fade the smiley pic.twitter.com/lvBv9Mv5vm
— tclow.sats (@tclowdotsats) January 20, 2024
The firm’s latest white paper outlines the proposed stablecoin, bitUSD, emphasizing collateral backing and ensuring public visibility on the BTC blockchain. According to the description, the U.S. dollar only “softly pegs” it.
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