San Salvador – Tether, the cryptocurrency company behind the world’s largest stablecoin, is introducing its USDT token—worth $140 billion—on the Bitcoin blockchain via the Lightning Network, the company announced on Thursday.
Speaking at the Plan B conference in San Salvador, Tether CEO Paolo Ardoino stated that integrating USDT with Bitcoin and Lightning aims to provide “practical solutions for remittances, payments, and other financial transactions that require speed and reliability.”
Why Are Stablecoins So Popular?
Stablecoins are a class of digital assets worth $200 billion, pegged to external assets—primarily the US dollar. They act as a bridge between traditional currencies and blockchain-based digital assets, gaining popularity for everyday use in payments, savings, and remittances, especially in developing countries.
Several factors contribute to their growing popularity.
Protection from Market Volatility
Stablecoins are backed by stable assets such as the US dollar, euro, or gold, making them a predictable tool for storing funds and reducing financial risks. This is particularly important given the sharp price fluctuations of cryptocurrencies like Bitcoin and Ethereum.
Convenience for International Payments
They enable fast and low-cost cross-border transactions, with fees as low as $0.10, bypassing traditional banking systems. This is crucial for businesses and individuals in countries with limited access to stable currencies.
Accessibility and Liquidity
Using stablecoins requires only an internet connection and a crypto wallet, making entry into the crypto economy easy. Their high liquidity on exchanges—USDT alone holds 78% of the market—ensures instant conversion into other assets.
A Solution for Economically Unstable Countries
In regions experiencing hyperinflation, such as Nigeria, Turkey, and Argentina, stablecoins have become an alternative to national currencies. They allow people to preserve their savings in US dollars and bypass currency restrictions.
Everyday Use
Businesses are increasingly accepting stablecoins as a payment method due to low transaction fees, no geographic restrictions, and the ability to automate payments through smart contracts.
Advantages of Integration
While stablecoin adoption has surged in recent years, most activity and supply have been concentrated on smart contract platforms like Ethereum, Tron, and Solana. However, integrating with the Bitcoin blockchain offers significant benefits.
Speed and Low Fees
Once fully integrated, USDT transactions will be instant, with transfer fees being only a fraction of those on other networks.
Security and Decentralization
USDT will benefit from Bitcoin’s security and decentralization while leveraging the speed and scalability of the Lightning Network.
Technical Details
The integration of USDT with Bitcoin is made possible by Taproot Assets—an infrastructure that enables asset issuance on Bitcoin’s base layer and facilitates transfers via the Lightning Network, a scaling solution designed for fast and low-cost transactions, making micropayments more efficient.
Developed by Lightning Labs and launched last year, this protocol significantly expands Bitcoin’s capabilities. It allows for the creation and management of various digital assets on Bitcoin, including stablecoins, tokens, and NFTs, effectively transforming Bitcoin into a multi-asset network while preserving its core principles of decentralization and security. With Taproot Assets, instant and low-cost transactions of various assets through the Lightning Network become possible, unlocking new use cases such as micropayments, remittances, and cross-border settlements.
Conclusion
This integration is expected to greatly expand the use cases for both USDT and Bitcoin. Tether CEO Paolo Ardoino stated that it will provide practical solutions for various financial applications that require both speed and reliability.
“Millions of people will now be able to use the most open and secure blockchain to send dollars worldwide,” said Elizabeth Stark, CEO of Lightning Labs, the organization behind Lightning Network.
“The addition of USDT to Bitcoin combines Bitcoin’s security and decentralization with the speed and scalability of Lightning,” she added.
