Dollars on the Lightning Network: a boon for emerging markets?
Dollars at the click of a button on the Lightning Network could soon become a reality. An innovation from Galoy, the provider of open source core banking platforms such as Bitcoin (BTC) Beach wallet, could provide safe haven from the volatility of BTC.
The innovation, called Stablesats, uses derivatives contracts to create a Bitcoin-backed synthetic dollar pegged to USD. The founder of Galoy, Nicolas Burtey, told Cointelegraph in an ‘explain like I’m five’ kind of way that the wallet works as so:
But why do we need dollars inside of a Lightning wallet–isn’t that what stablecoins are for? In effect, stablecoins such as USD Coin (USDC) and Tether (USDT) already provide the functionality of synthetic or digital dollars.
In a YouTube video, Burtey explains that “Lightning [Network] is the best payment protocol there is, so instead of using all these different payment protocols that stablecoins use.” It keeps users in one place in one app or wallet. According to the website, “Stablesats only relies on the Bitcoin payment network to work.”
The idea was built upon a suggestion by Bitmexin 2015 of creating a synthetic USD. However, in a press release, Burtey suggests that the idea may have been before its time: there was no Lightning Network and no nation-state Bitcoin adoption.
As Bitcoin continues to make waves in emerging markets, price volatility is often brought into question. For example, the Bank of England chief argues that Bitcoin is too volatile for legal tender. The ease with which users can now access dollars flies in the face of that argument. Burtey told Cointelegraph sums up the situation:
As Cointelegraph reports, U.S. dollar-pegged stablecoins are “viable alternatives” in emerging markets, and appetite for them
Read more on cointelegraph.com
