CoinShares reports that the emerging Bitcoin stablecoin is poised to challenge the market leader.
CoinShares analysts predict the emergence of a Bitcoin-based stablecoin in 2024, which could potentially rival existing stablecoins in terms of transaction speed and cost-effectiveness.
This development, highlighted in CoinShares’ latest outlook report written by CoinShares’ Bitcoin research director Christopher Bendiksen and analyst Matthew Kimmel, suggests that 2024 will be a significant year for Bitcoin in the stablecoin market. They predict the introduction of Bitcoin projects aimed at competing in the modern stablecoin sector, designed to be user-friendly and easily accessible.
Bendiksen and Kimmel believe that a successful Bitcoin (BTC) stablecoin project could match or even surpass the efficiency and cost-effectiveness of existing alternatives. According to analysts, the main advantage of Bitcoin-based stablecoins is the underlying stability and security of Bitcoin infrastructure.
They highlight Bitcoin’s potential as a stablecoin platform, noting that “the Bitcoin blockchain boasts the longest history, greatest stability, least technical debt, and strongest guarantees.”
But the pair also acknowledge existing technology barriers and user preferences. Historically, stablecoin users have preferred platforms with low transaction costs and high speeds.
Despite these challenges, Bendiksen and Kimmel are optimistic that they can integrate stablecoin spending into businesses and Bitcoin plugins, strengthening Bitcoin’s monetary properties and resistance to censorship.
The concept of Bitcoin-based stablecoins is not entirely new. Companies such as Stacks, RSK, and Liquid Network have previously developed stablecoins on Bitcoin’s layer 2 network. These include USDA, Dollar on Chain (DoC), rDAI (RDAI), and Liquid-based Tether (L-USDT).
Trust Machines, a notable player in the Bitcoin infrastructure space, suggests that these stablecoins exist in Bitcoin’s second layer, but are likely to migrate to Bitcoin’s base layer in the future.
The interesting development comes from bitSmiley Labs, which is backed by the venture capital arm of cryptocurrency exchange OKX. The company According to reports We are preparing to launch a stablecoin in the “bitRC20 format” on the Bitcoin blockchain.
According to the white paper on “bitUSD”, every bitUSD in circulation is backed by overcollateralization and transactions are recorded visibly on the Bitcoin blockchain. However, bitUSD is only ‘soft-pegged’ to the US dollar.