Bitcoin offers a politics-free medium for payments
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Illustration: Aïda Amer/Axios
Stablecoins are the biggest success in the world of cryptocurrency, with one exception: the original cryptocurrency, bitcoin, is bigger than all the rest of the crypto market, including stablecoins, combined.
Why it matters: There are companies that believe the Bitcoin blockchain should also secure stablecoins — the tokens pegged to real-world money — which are being called the industry's killer app.
The big picture: The market has made it very clear what it likes about stablecoins: speed, transparency and, most importantly, very close to zero volatility.
- Bitcoiners have an alternative thesis, that what the world really needs is money without politics.
- Bitcoin is really the only large, highly liquid and credibly neutral layer of transaction in the world.
State of play: Bitcoin's blockchain is pricey to use, but its sister network, Lightning, is not.
- Credibly neutral it may be, but there's not a popular low-volatility instrument on Bitcoin or Lightning, yet.
Driving the news: Lightspark announced Tuesday that it's created Spark, which enables issuing tokens and building apps in a trust-minimized way, one that relies on Bitcoin for security guarantees, in order to create a substrate that thousands of stablecoins could transact over.
- Lightspark previously released an easy-to-understand payments addressing system that looks like email, that international banks like Xapo and Nubank use today.
- It just announced a partnership with a platform for issuing stablecoins.
What they're saying: Lightspark CEO David Marcus (an alum of PayPal and Meta, when it was still Facebook) tells Axios that it wants to make the Bitcoin blockchain the transaction medium for all kinds of stablecoins — thousands of them.
- "The way that the market currently is configured for stablecoins is not going to be the way that the market will look like two years from now," Marcus said.
Between the lines: Stablecoins are attractive to banks and fintechs because issuers get to keep the yield earned off the principle, making for a very easy and sweet profit margin, at least at times with high interest rates.
- But if dropping interest rates don't kill that margin, competition will. Stablecoin issuers are already finding ways to share their yield with holders as a way to increase market share.
- But Lightspark has a plan for issuers to make money even after market forces push them turn over all their yields to users, which is only a matter of time.
Zoom out: Lightspark isn't the only company out there looking to move global transactions onto Bitcoin.
- Strike is another Bitcoin-powered company that reaches 100 countries. Its founder managed to sell El Salvador on Bitcoin.
- It already enables stablecoin withdrawals in several companies. And it allows the most dedicated Bitcoiners to pay bills through the Strike app, with either bitcoins or money.
What we're watching: Block Inc.'s Square point-of-sale network.
- Block has leaned into crypto, but mostly into bitcoin as an investment. It could, however, tap into stablecoins as a new payment option. It has a team working on it, based on LinkedIn posts.
- Block declined to comment for Axios.
The intrigue: In a world that's becoming increasingly polarized, the U.S. weaponization of the dollar could drive more nations away from payment rails powered by U.S. money.
- If they have a hard time agreeing on an alternative state-backed medium, Bitcoin is right there. A convenient non-political meeting place for nations looking for an alternative.
- All it needs is for someone to build a system that could handle that kind of load.
Go deeper: Stablecoins' trillion-dollar "Game of Thrones" is afoot
