A visual representation of Bitcoin cryptocurrency.
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There’s a new and low-cost way to quickly send U.S. digital dollars around the world without a bank. And it’s built on bitcoin.
Blockchain start-up Lightning Labs announced Tuesday that it’s launching the Taro protocol, a technology that will route fiat-pegged stablecoins and other digital assets through the bitcoin monetary network.
Taro uses Lightning, a payments platform built on top of bitcoin’s base layer that enables global, high volume, virtually instantaneous, and low-fee transactions using the security of the bitcoin blockchain.
“It’s one of those things where people don’t really know how the credit card system works – and it just works,” Lightning Labs CEO Elizabeth Stark told CNBC.
Typically, this ‘layer two’ payments platform is all about making bitcoin easier to spend and receive – but Lightning Labs has decided to extend the use case of this tech to other types of virtual cash.
“With this technology, you could route all the world’s currencies through bitcoin,” said Stark.
“People will be able to seamlessly go between bitcoin and say, a USD stablecoin, or peso, euro, yen, etc. And they can send those globally, instantly and with extremely low fees,” she said.
How it works
There is bitcoin, the asset class, and then there’s the global interoperable bitcoin monetary network. Lightning Labs is piggybacking off the latter.
You can think of Taro’s payment workflow as enabling bitcoin to serve as a hybrid of the SWIFT financial messaging system (the communication layer) and correspondent banking (routing component).
Typically, all nodes must agree to confirm a transaction on the bitcoin network, verifying every transaction on the blockchain. The process highlights one of bitcoin’s greatest strengths: its high degree of network decentralization, which is a big part of what ensures its security. But it is also relatively slow, averaging five transactions per second on bitcoin’s base…
