The news of USDT (Tether) coming to Bitcoin and Lightning via Taproot assets has been met with different reactions.
Some think it is good for Bitcoin (most, in fact, based on a small study I conducted on x; yes, I know the sample size is not large enough for the results to be significant. I share it anyway) while others is not so excited about it.
Tether (USDT) on Bitcoin and Lightning is:
(Please share why in the comments and please RT when you vote.)
– Frank Corva (@frankcorva) 13 February 2025
“Others” includes me – I’m not so excited about it.
That said, I’ve tried to be open.
I have even recently profiled Jesse Shrader, co -founder and CEO of Amboss, a company that provides intelligent payment infrastructure for payments made over Lightning, which is a supporter of USDT on Bitcoin and Lightning, in efforts to see what I Maybe lacking the benefits of being able to trade with digital US dollars over lightning.
In my interview with Shrader he put forward the following points:
- Spreading of USDT has proven that there is a demand for US dollars globally
- Usdt is a massive payment mechanism; It processed over 10 trillion dollars in payments in 2024, more than MasterCard, and a certain percentage of these payments will now be made over lightning
- Usdt brings more liquidity to Lightning Network which will help the network grow and handle larger payments
From a business perspective, it is difficult to argue that the above is not good reasons to bring usd to Lightning. And as someone who thinks people should be free to spend the money they want, I can’t argue with them when I look at them through a practical lens.
However, I think that bringing usd to Bitcoin and Lightning comes at a price.
One dimension of this award is technical, while the other is philosophical.
At the technical level, running USDT over Bitcoin and Lightning potentially Bitcoin’s security is at risk.
If we see another Bitcoin hard fork comparable to the one we saw during block size war supported “Tether Fork” on the network, which may also include other changes in the network that could jeopardize Bitcoin’s security.
In other words, if like Coinbase, Tether and some other big players in Bitcoin Space support and push for “Tether Fork”, other major financial nodes are likely to follow.
What’s more, anyone who uses usd on Bitcoin and Lightning will probably also support the side of the fork because USDT, which stays on the chain on non-“tether fork”, is likely to be canceled.
Lightning Alden wrote about this in its essay “Proof-of-Stake and StableCoins: A Blockchain Centralization Dilemma.”
In the play, she said “Depotors can cancel the value of all stableecoins on which side of the fork they do not consider the right one.”
Granted, the ALDE referred the Smart Contract blockchains like Ethereum and Solana, which are very dependent on defi, which stableecoins are an important component in when she wrote this, but the same would apply to Bitcoin. (Alden was right in this claim that we saw when Ethereum switched from a proof-of-work to proof-of-stake consensus mechanism in 2022’s “The Merge.”
Issuers after the go, stableecoins such as circle and tether continued to support only the tokenized US dollars in Ethereum and not Ethereumpow (ethw), the older chain that continued to run proof-of-work consensus algorithm.)
The same type of scenario could play out with bitcoin in the case of a chain division, giving Tether an excessive amount of power over Bitcoin.
My other reason not to suffer usd on Bitcoin is a philosophical.
Bitcoin, released in the world in the wake of the big financial crisis in 2007-2009, was created as an alternative to the US dollar.
At that time the dollar was printed A lot (ie devalued) to save the same banks that caused the crisis.
Bitcoin, money that cannot be printed by the incident of a government or central bank, was created to compete with the US dollar, so as not to help bow it.
To bring usdt, a mechanism that the US government uses to support the US dollar healing around the world, to Bitcoin feels morally wrong to me – and I’m not here for it.
So at a practical level I get why some are too USDT that comes to Bitcoin and Lightning. I just think many people lack the bigger picture in the fact that Bitcoin potentially has both been put into a vulnerable position and has had part of its value proposition overshadowed (albeit maybe just temporarily) as a result.
This article is one Take. Opinions expressed are completely the author’s and does not necessarily reflect BTC Inc or Bitcoin magazine.