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"Tether's USDT Joins Bitcoin's Lightning Network: Faster, Cheaper Transactions Ahead"

Coin WorldThursday, Jan 30, 2025 9:24 pm ET

1min read

Tether, the issuer of the largest stablecoin by market capitalization, USDT, has announced a significant integration with the Bitcoin ecosystem. The stablecoin will now be supported on the Bitcoin mainnet and the Lightning Network, thanks to the Taproot Assets protocol developed by Lightning Labs. This integration promises faster, low-cost transactions while leveraging Bitcoin's robust security and scalability.

Tether's USDT, with a market cap of $139.4 billion, is nearly three times larger than its closest rival, Circle's USD Coin (USDC). The stablecoin processed $10 trillion worth of transactions in 2024, closing in on payment giant Visa's $16 trillion. Tether manages the token across more than ten blockchains, including Ethereum, Tron, Solana, and Avalanche.

The integration of USDT into the Bitcoin Lightning Network is expected to allow merchants accepting Bitcoin (BTC) over Lightning to add USDT as a payment option using the same infrastructure. This development is particularly significant for users in emerging markets, where stablecoins like USDT often serve as critical hedges against local currency devaluation.

Lightning Labs, the firm behind the Lightning Network, has built the solution by leveraging the Taproot Assets protocol, which expanded the Bitcoin network's functionality to support tokenized assets in 2022. The integration could support the coming "wave" of transactions between artificial intelligence agents and autonomous vehicles, in addition to supporting USDT micropayments on Lightning.

Tether's relocation to El Salvador earlier this month, the only country where Bitcoin is currently legal tender, has further facilitated this integration. El Salvador rolled out a Bitcoin Lightning Network-supported Chivo Wallet to its residents in September 2021, although its success has been limited. Merchants were mandated to accept Bitcoin as a payment until last month when it agreed to make the payments voluntary as part of a deal with the International Monetary Fund.

The integration of Tether's USDT into the Bitcoin Lightning Network is a significant advancement for both Tether and Lightning Labs, enhancing the viability of cryptocurrencies for regular use. With the promise of increased transaction speed and accessibility, particularly in emerging markets, this partnership could usher in a new era for digital commerce. The adaptability of USDT within the Lightning Network serves not only current market demands but also future technological developments, positioning cryptocurrency

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