The emergence of Bitcoin-based stablecoins could make 2024 a pivotal year for the leading digital network, according to analysts at European alternative asset management firm CoinShares.
In its Outlook 2024 report, the firm explained that the effects of a stablecoin settlement on Bitcoin would be numerous, including the enhancement of BTC’s monetary properties and the acceleration of its global adoption.
The Need for a Bitcoin-Based Stablecoin
With Bitcoin in its second decade of existence, conversations about the network have moved from the awareness into the merit phase. People no longer wonder what cryptocurrencies are but how such assets solve real problems.
While native assets are still a “contentious topic,” according to CoinShares, users have become familiar with digitized crypto dollars, as it is easy to imagine the benefits of tokenizing the USD. The success of stablecoins can be seen in their growth within four years: a 1,100% increase to a market cap of over $123 billion and transfer volumes totaling $5 trillion in the past year.
Despite the success of these assets, they are facing significant challenges. One such is almost all stablecoins being created on centralized or unstable blockchains, making users vulnerable to systemic failures like the Terra ecosystem collapse.
These issues have presented the need for developers to launch stablecoins on Bitcoin, as the network has the longest history, greatest stability, least technical debt, and strongest assurances.
A Pivotal Year
Although there is a need for stablecoins on the Bitcoin blockchain, the path to such a feat is technically challenging, as BTC was designed without the flexibility to support external assets like dollar-pegged tokens natively.
Regardless, CoinShares’ analysts believe 2024 will be pivotal for Bitcoin in the stablecoin arena as viable development projects are predicted to emerge as accessible tools. These projects would “rival” the speed and cost of other stablecoins while inheriting the fundamental stability of Bitcoin infrastructure.
This year, Bitcoin projects focused on competing in the stablecoin sector will likely be made accessible to users, while plugins will integrate stablecoin spending, paving the way for continued usage growth.
“We find a successful integration likely both increases transaction demand and onboards a new set of users to Bitcoin. Secondly, stablecoins could very well act as a gateway, introducing bitcoin to a broader audience of users, who perhaps have not yet explored its potential and properties as money,” analysts added.