Important facts:
-
Grayscale estimates that stablecoins will become mainstream in retail transactions.
-
Bitcoin would also serve as a settlement layer for non-financial utilities.
“Bitcoin (BTC) could compete with the dollar as an international currency,” says investment firm Grayscale in a recent report. This is due to the low transaction costs caused by the Lightning Network.
However, the use of Bitcoin as a means of payment in retail transactions can reach parts of the global economy “where certain conditions are met.” says Grayscale.
The conditions that Grayscale speaks of are met Countries with unstable national currencies or banking systems. Additionally, it says that users may also “appreciate” Bitcoin’s censorship-resistant properties, especially “when transaction costs are lower” or when existing payment systems in these countries do not meet the requirements necessary to operate.
An example is the introduction of Bitcoin in El Salvador. As CriptoNoticias reported, the Central American country converted the asset into fiat in 2021.
Grayscale explains that the BTC wallet Chivo Wallet, created by the Salvadoran government, “covers all retail transaction fees and overcomes network challenges.”
“The most important thing is that the nation [El Salvador] “Previously there was no volatile national currency (it was converted into dollars) and it remains to be seen to what extent Bitcoin will continue to be a durable medium of transactions,” notes Grayscale.
Otherwise, the report emphasizes that in developed economies with stable economies it is “unlikely” that BTC will be used as a means of payment in the “long term”.
If these economies can benefit from anything, it will certainly be from blockchains can help improve payment infrastructures existing grayscale highlights.
On the other hand, it is noted that the vast majority of retail transactions involve the use of stable cryptocurrencies or stablecoins. These are tokens whose value is linked to an external asset, such as the US dollar. And perhaps central bank digital currencies (CBDCs) will also be used at some point.
Non-Financial Utilities of the Bitcoin Network
Another use of the Bitcoin network considered by Grayscale would be its use as a settlement layer for non-financial gains. This category is led by smart contracts and non-fungible tokens (NFT).
It is worth remembering that in December 2022, Ordinals, a system for creating NFTs on the Bitcoin network, was presented. “This use case also opens the network to digital art and collectibles markets,” the report says (although NFTs have existed on Bitcoin for several years using protocols like CounterParty).
The NFT, here called “inscription,” is created in ordinal numbers by associating, among other things, an image, text, video or application with a Satoshi (minimum unit of Bitcoin), which is then identifiable, transferable and traceable.
Although the NFT boom was big last May with 832,648 transactions of these tokens last August fell to just over 20,000. This represents a 97% decrease.
Regarding the settlement layer, Grayscale points to smart contracts would further expand the reach of the Bitcoin network. In this sense, it focuses on Stacks, a Bitcoin sidechain.
“Stacks brings smart contract functionality to the Bitcoin ecosystem and offers decentralized applications (dApps), including financial, gaming and social applications,” he notes.
However, Stacks is still in the experimental stage. Advances in both atomic numbers and stacks suggest Bitcoin’s “potential relevance to sectors ranging from digital art and collectibles to any asset that can be programmed into a smart contract.”