Jannat Ara

CoinShares Forecasts Emergence of Bitcoin-Based Stablecoin to Challenge Market Leaders in 2024

CoinShares analysts have predicted the introduction of a Bitcoin-based stablecoin in 2024, according to their latest outlook report released on January 22. Authored by Christopher Bendiksen, Head of Bitcoin Research at CoinShares, and analyst Matthew Kimmel, the report anticipates the emergence of a Bitcoin project aimed at competing with existing stablecoins, offering user-friendliness and accessibility.

The analysts foresee the potential for a successful Bitcoin (BTC) stablecoin project to match or exceed the efficiency and cost-effectiveness of current alternatives. One of the key advantages highlighted is the inherent stability and security of the Bitcoin infrastructure, with the analysts emphasizing Bitcoin’s extensive history, stability, minimal technical debt, and robust assurances.

Despite acknowledging existing technical barriers and user preferences for lower transaction costs and higher speeds, Bendiksen and Kimmel express optimism about the integration of stablecoin spending into businesses and Bitcoin plugins. This integration could enhance Bitcoin’s monetary properties and its resistance to censorship.

While the concept of Bitcoin-based stablecoins is not new, with initiatives on Bitcoin’s layer-2 network by firms like Stacks, RSK, and Liquid Network, a notable development comes from bitSmiley Labs. Supported by the venture capital arm of cryptocurrency exchange OKX, bitSmiley Labs is reportedly preparing to release a stablecoin on the Bitcoin blockchain in the “bitRC20 format,” called “bitUSD.” The white paper for bitUSD indicates that all circulating bitUSD will be backed by excess collateral, with transactions visibly recorded on the Bitcoin blockchain. It’s important to note that bitUSD will be ‘softly pegged’ to the U.S. dollar.

The analysts at CoinShares believe that 2024 will be a pivotal year for Bitcoin in the stablecoin market, and the emergence of a competitive Bitcoin-based stablecoin could reshape the landscape, providing a new dimension to the ongoing evolution of digital currencies.

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