There will soon be stablecoins on the Bitcoin network that compete with existing stablecoins
2024 is forecast to be a “turning point” for Bitcoin in the stablecoin sector, according to predictions by analysts at CoinShares. This expectation comes from the fact that a Bitcoin-based stablecoin project could compete in speed and transaction costs with
Bitcoin, with its long history, stability and reliability, has proven itself as a good platform for stablecoin development. However, Bitcoin's weakness lies in its flexibility and higher transaction costs compared to other platforms such as Ethereum. This has created a challenge in developing stablecoins directly on the Bitcoin blockchain. Currently, several Bitcoin stablecoin projects have launched on 2nd layers such as Stacks, RSK and Liquid Network. However, they have not yet appeared directly on the Bitcoin blockchain. The company bitSmiley Labs provides an example when it is developing a stablecoin directly on Bitcoin, but still faces technical challenges. According to CoinShares, it is predicted that Bitcoin stablecoin projects will become more accessible to users in 2024.
This could open the door for businesses to integrate Bitcoin stablecoins into their products and services, thereby promote wider use within the user community. Several current Bitcoin stablecoin projects such as USDA, Dollar on Chain (DoC), rDAI and Tether Liquid have launched on layer 2s such as Stacks, RSK and Liquid Network.
However, technical challenges remain to develop stablecoins directly on the Bitcoin blockchain. BitSmiley Labs is one of the companies pioneering the development of stablecoins directly on Bitcoin. The bitUSD project based on the bitRC20 standard on the Bitcoin blockchain is a good example.
However, this project is only “lightly pegged” to USD and still faces challenges in flexibility and transaction costs. If Bitcoin stablecoin projects can succeed, they could further strengthen Bitcoin's monetary nature and help increase its censorship resistance.
Using stablecoins on the Bitcoin platform can also help create a more secure and decentralized financial ecosystem. However, to achieve this, developers need to continue efforts to solve technical challenges, as well as create appropriate legal and risk management mechanisms. At the same time, strengthening cooperation between Bitcoin stablecoin projects and the user community will also play an important role in their development and application.
Above all, 2024 promises to be a pivotal moment for the development of Bitcoin-based stablecoins. The expectations and opportunities opened up by the Bitcoin stablecoin project could create significant advances in the field of decentralized finance and bring enormous benefits to both the user community and the global financial system. . With continued progress, we may witness the spread of stablecoins on the Bitcoin platform and the potential applications they bring in the near future.
