The two crypto firms are attempting to improve cross-border payments via stablecoins for large corporations and institutions.
Gold-backed BRICS currency will be ‘very hard’ to deliver: Lyn Alden
A BRICS common currency will be challenging to initiate and maintain, though efforts to dethrone the US dollar could have an impact on Bitcoin, says investment strategist Lyn Alden.
Blockchain will save financial institutions $10B by 2030: Ripple
Among the 300 payment leaders surveyed across 45 countries, 97% believe that blockchain will play a crucial role in faster payment systems within the next three years.
China’s digital yuan nears $250B transaction volume: Central bank governor
While the adoption and use cases of China’s e-CNY are expanding, the digital yuan still only represents 0.16% of China’s monetary supply.
IMF Official Presents Blueprint for Cross-Border CBDCs
The international organization wants to help cut the cost of cross-border transactions, without abandoning compliance checks or capital controls.
Aussie ‘Big 4’ bank mints stablecoin for carbon trading and remittances
This marks the second “Big 4” bank in Australia to launch an Australian-dollar pegged stablecoin in a bid to boost the digital economy.
SWIFT action: JPMorgan and Visa team on cross-border blockchain payments
Visa is set to integrate its B2B connect network with JPMorgan’s suit of blockchain based cross-border payment products.
BIS marks CBDC pilot as ‘successful’ with $22M transacted
Over $12 million in value was issued in the pilot with commercial and central banks in Hong Kong, Thailand, the UAE and China taking part.
Lightning Speed: Taro Wants To Abolish Cross-Border Payments, Disrupt The Market
Have you heard about Taro? It’s an improvement proposal for the Lightning Network that Lightning Labs introduced in April. “Taro makes Bitcoin and Lightning multi-asset networks,” the company claims in the latest edition of their newsletter. They also explain in simple words what the protocol does, how it does it, and the implications of its implementation.
“In a world of omnipresent communications connectivity, nobody says “cross-border messaging” anymore. Taro promises to do the same thing to “cross-border payments” by decentralizing the entire global FX market into a protocol that can run on a Raspberry Pi by anyone, anywhere.”
Is the Lightning Labs exaggerating? Or is Taro the protocol that will bring the next billion people to the Lightning Network? “The opportunity provided by Taro bringing assets like stablecoins to the Lightning Network is clearly enormous,” the company claims. Can Lightning Labs back that case and argue it convincingly? Let’s find out.
What Taro Does And How It Does It
The first thing Lightning Labs makes clear is the psychology behind the improvement proposal. It almost seems like bitcoin’s Lightning Network will be serving Taro and not the other way around.
“Instead of starting from scratch and bootstrapping a new ecosystem of nodes and liquidity, Taro will leverage the existing network effects of both the infrastructure that’s been built out over the last several years plus the 4000+ BTC allocated to the network today as a global routing currency.”
How does it work, though? The “edge nodes” are the key. By “integrating with Taro,” normal Lightning nodes can now “process an instantaneous conversion from L-USD into BTC or vice versa, for a small fee.” That means that “every Taro transaction on the Lightning Network will be converted into BTC by the first hop, routed across the network as BTC, and then converted back into a Taro asset by the last hop before the destination”
What is a “Taro asset”? Whatever you want, your BTC can be “converted into different assets such as USD to EUR or USD to BTC.” Or, as Bitrefil’s Sergej Kotliar puts it, “Pay in currency of sender’s choice, receive in currency of recipient’s choice. This means that every wallet can now have native Strike-type “USD balance” functionality for example. With no need to trust the wallet, the only trust lies in the issuer of the token.”
The trust model is the main difference from Galoy’s Stablesats, another novel concept that looks for a similar result.
BTC price chart for 08/13/2022 on Bitstamp | Source: BTC/USD on TradingView.com
What Does Taro Mean For The Lightning Network?
In a recent interview published by NewsBTC, AXX’s head of research and strategy Ben Caselin explained the protocol further
“In Taro, smart contracts and asset transfers are not executed by the blockchain, and they are also not enforced by the blockchain. Instead, transfers are executed by the sender of an asset (who has to make a corresponding bitcoin transaction), and enforced by the recipient, same as the Lightning Network.”
And in the previous Lightning Speed, we theorized about how big could this development be for the Lightning Network.
“According to The Bitcoin Layer, “a global capital market operating on top of bitcoin-denominated financial rails is inching closer with each new onramp.” And the Taro protocol and all of the assets it would bring to The Lightning Network is the mother of all onramps.”
Back to Lightning Lab’s newsletter, the company toyed with even bigger expectations. For example:
“A community bank could issue a local stablecoin on Taro and it would only need a handful of nodes or liquidity providers to make a market between the local currency and the BTC core of the Lightning Network to be connected to a global community of buyers and sellers. No permissioning required!”
They’ll Never See It Coming
According to Lightning Labs, bitcoin “renders cross-border payments obsolete.” Stablecoins are a huge business and so are cross-border payments. In the intersection between them, Taro stands tall. “Visa’s 65% operating margin is one of the highest of all the companies in the S&P 500 index, and this margin is Lightning and Taro’s opportunity. They’ll never see it coming.”
The company expects that the benefit for everyone working on the Lightining Network will be tremendous. “We expect that bringing Taro to market and making Lightning a multi-asset network will dramatically expand the Total Addressable Market for those building Lightning applications.” And you know what more users mean, more of those sweet-sweet fees.}
Featured Image by Joseph Mucira from Pixabay | Charts by TradingView
Malaysia’s Central Bank actively assessing CBDC options
Malaysia’s central bank recently completed a proof-of-concept for a CBDC with three other nations and may consider developing its own cross-border payment system using the blockchain.
Palau partners with Ripple on climate friendly national digital currency
The partnership will help Palau be climate-friendly while enhancing its cross-border payments and digital currency technologies.
Stellar to Add Support for USDC Stablecoin, Opening Up Dollar-Backed Remittances
The addition of the dollar-backed USDC stablecoin seeks to bolster Stellar’s standing as a cross-border payments network.
60 Latin American Banks Can Now Use Bitcoin for Cross-Border Payments
Crypto exchange Bitex wants to decrease costs associated with cross-border banking using the bitcoin blockchain.
Ripple Event Reveal: 3 Companies Are Now Using XRP for Real Payments
During Ripple’s annual Swell conference, CEO Brad Garlinghouse announced three firms that will use XRP in commercial cross-border payments.
Thai Bank Pilots Cross-Border Transaction Using Blockchain
Thailand’s Bank of Ayudhya successfully piloted a cross-border transaction using its own blockchain interledger, it announced Tuesday.
A Bank In Argentina Is Now Using Bitcoin for Cross-Border Payments
Cryptocurrency trading startup Bitex has trialed a cross-border payments system using bitcoin with an Argentinian bank.
US Credit Unions Will Use DLT to Expand Payments Business
CULedger will use the public ledger version of Hedera’s hashgraph to build a global system for cross-border payments.
Santander Launching Blockchain Payment App This Week
Banking giant Santander Group is reportedly launching a blockchain-based application for cross-border foreign exchange on Friday.
Santander Launching Blockchain Payment App This Week
Banking giant Santander Group is reportedly launching a blockchain-based application for cross-border foreign exchange on Friday.
Singapore Central Bank Touts Blockchain for Cross-Border Payments
The chief of the Monetary Authority of Singapore has spoken of how blockchain’s “strongest” use case is in cross-border settlement.