Cryptocurrency investment firm CoinShares forecasts the emergence of a Bitcoin-based stablecoin in 2024, potentially transforming the stablecoin sector. This development, as analyzed by CoinShares’ head of Bitcoin research Christopher Bendiksen and analyst Matthew Kimmel, could offer a competitive alternative in terms of speed and cost compared to existing stablecoins, leveraging the inherent stability of Bitcoin’s infrastructure.
Pivotal Year for Bitcoin: 2024 is anticipated to be a significant year for Bitcoin in the stablecoin arena, with the expectation of a Bitcoin-focused project becoming easily accessible for users.
Competitive Advantages: A successful Bitcoin stablecoin could rival existing alternatives in speed and cost efficiencies while benefiting from Bitcoin’s long history, stability, minimal technical debt, and strong assurances.
Integration and Usage Growth: The analysts predict that businesses and Bitcoin plugins will increasingly integrate stablecoin spending, fostering continued growth in usage.
Strengthening Bitcoin’s Monetary Properties: The introduction of a Bitcoin-based stablecoin could enhance Bitcoin’s monetary attributes and its ability to resist censorship.
Despite the optimistic outlook, Bendiksen and Kimmel acknowledge the technical hurdles. Bitcoin’s architecture does not natively support external assets like dollar-pegged tokens, and historically, stablecoin adoption has gravitated towards platforms offering lower transaction costs and higher speeds.
Several Bitcoin infrastructure firms, including Stacks, RSK, and Liquid Network, have already launched U.S. dollar-denominated stablecoins on Bitcoin’s layer-2 networks, such as USDA, Dollar on Chain (DoC), rDAI (RDAI), and Liquid-based Tether (L-USDT). Trust Machines suggests that while these stablecoins exist on Bitcoin’s second layer, bringing them to Bitcoin’s base layer is not currently feasible.
bitSmiley Labs, supported by the venture capital arm of OKX, plans to release a stablecoin on the Bitcoin blockchain in the “bitRC20 format.” Their white paper for “bitUSD” states that all bitUSD in circulation will be backed by excess collateral and transactions will be publicly visible on the Bitcoin blockchain. However, bitUSD will be only “softly pegged” to the U.S. dollar.
The introduction of a Bitcoin-based stablecoin could significantly impact the cryptocurrency market, offering a new stablecoin option that combines the benefits of Bitcoin’s robust infrastructure with the stability and utility of a fiat-pegged asset. However, the success of such a venture will depend on overcoming technical challenges and gaining user adoption amidst a competitive stablecoin landscape.
Get $200 Free Bitcoins every hour! No Deposit No Credit Card required. Sign Up