Bitcoin Magazine
I Still Don’t Like Tether (USDT) On Bitcoin And Lightning
The news of USDT (Tether) coming to Bitcoin and Lightning via Taproot Assets has been met with various reactions.
Some believe it’s good for Bitcoin (most, actually, based on a small survey I conducted on X; yes, I know the sample size isn’t large enough for the results to be significant. I’M SHARING IT ANYWAY), while others aren’t so enthused about it.
Tether (USDT) on Bitcoin and Lightning is:(Please share why in the comments and please RT after you vote.)— Frank Corva (@frankcorva) February 13, 2025
“Others” includes me — I’m not so enthused about it.
That said, I’ve tried to be open-minded.
I even recently profiled Jesse Shrader, the co-founder and CEO of Amboss, a company that provides intelligent payment infrastructure for payments made over Lightning, who’s a proponent of USDT on Bitcoin and Lightning, in efforts to see what I might be missing about the benefits of being able to transact with digital U.S. dollars over Lightning.
In my interview with Shrader, he made the following points:
The proliferation of USDT has proven that there’s a demand for U.S. dollars globally
USDT is a massive payment mechanism; it processed over $10 trillion in payments in 2024, more than MasterCard, and some percentage of those payments will now be made over Lightning
USDT will bring more liquidity to the Lightning Network, which will help the network grow and handle bigger payments
From a business perspective, it’s hard to argue that the above aren’t good reasons to bring USDT to Lightning. And, as someone who believes that people should be free to use whatever money they want, I can’t argue with them when looking at them through a practical lens.
However, I do believe that bringing USDT to Bitcoin and Lightning comes at a price.
One dimension of that price is technical, while the other is philosophical.
On the technical level, running USDT over Bitcoin and Lightning potentially puts Bitcoin’s security at risk.
If we see another Bitcoin hard fork comparable to the one we saw during the Blocksize War, larger economic nodes on the Bitcoin network, like the one operated by Coinbase, which manages much of the bitcoin that backs the U.S. spot bitcoin ETFs, may opt to support the “Tether fork” of the network, which could also include other changes to the network that could jeopardize Bitcoin’s security in the long run.
In other words, if the likes of Coinbase, Tether and some other major players in the Bitcoin space support and push for the “Tether fork,” other major economic nodes will likely follow suit.
What is more, everyone using USDT on Bitcoin and Lightning would also likely support that side of the fork, because the USDT that remains on the chain of the non-”Tether fork” will likely be nullified.
Lyn Alden wrote about this in her essay “Proof-Of-Stake And Stablecoins: A B
