Sunday 7 August 2022
Home / none / Dollars on the Lightning Network: A boon for emerging markets?

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 the 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:

“When we receive sats over Lightning, we convert it into dollars so that even if the price of Bitcoin changes, the user is not affected by the volatility.”

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 t create 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. Speaking with Cointelegraph, Burtey summed up the situation:

“Because lightning is getting a lot of traction in developing countries, but this is also the place where people live paycheck to paycheck. So they can't necessarily afford the volatility until they manage to have some savings.”

As Cointelegraph reports, U.S. dollar-pegged stablecoins are “viable alternatives” in emerging markets, and appetite for them swells in countries with high inflation and unstable regimes. The innovation on the Lightning Network provides users with another means of dollar-exposure.

Sebastien Verreault, the lead contributor to the Stablesats GitHub repository, explained that Dollar exposure is just a first step: “Ultimately, we can unlock the ability for every Lightning user to choose their own units of account without ever leaving the network.”

Related: Busking on Bitcoin: How Lightning Network outperforms Ethereum for tipping

Galoy is behind the Bitcoin Beach Wallet in El Salvador, the Bitcoin Jungle App in Costa Rica and the Guatt Wallet in Panama, which is yet to be released. The Bitcoin Beach Wallet is the most popular wallet in El Zonte, the heart of Bitcoin adoption in El Salvador.

Nicolas Burtey (right) with Central Bankers explaining the Bitcoin Beach Wallet in May. Source: Twitter

Central bankers from around the world tried out the Bitcoin Beach Wallet on a visit to El Salvador in May this year. According to Burtey, the team at Galoy is writing the dealer code for StacbleSats "so that it could more easily run by non-custodial wallet in the future." The U.S. dollar on the Lightning Network could become a more permanent feature.

Original Article

About Jude Savage

Check Also

6 Questions for Tongtong Bee of Panony

We ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and throw in a few random zingers to keep them on their toes! This week, our 6 Questions go to Tongtong Bee, co-founder of Panony — an incubator, investor and adviser for blockchain and Web3 business. I’m Tongtong Bee, the co-founder of Panony and founder and editor-in-chief of PANews. I started my professional journey as a journalist at China’s traditional news outlets, including China News Service, Jiemian and Cailian Media Group. Since 2015, I’ve been covering blockchain and fintech news as one of the few journalists in China to focus on these sectors at the time. My focus on economic issues and emerging technologies led to me being selected to report on the “Two Sessions” (NPC and CPPCC) in 2018. And that’s the year my business partner Alyssa and I started PANews. We’ve published over 20,000 articles with an average of over 5 million page views per month, became a frequently cited s..

Leave a Reply

Your email address will not be published. Required fields are marked *