Everyone has heard the Chinese proverb British misquote: “May you live in interesting times,” and how it’s supposed to be a curse. It sounds deep, like a quote for edgelords over 80. But have you ever considered the alternative? According to the Anglo-Saxon Chronicle, there were nearly two centuries where nothing much happened. Vivian Mercier famously called Waiting for Godot “a play in which nothing happens, twice.” But nothing happening 191 times? I’ll take interesting times any day.And that’s exactly what we have now. Tether, with their stablecoin USDT, are coming to Lightning. We’ve been talking a lot recently about how Lightning is the common language of the bitcoin economy and how bitcoin is a medium of exchange (and it really is; read our report). These two arguments now seem to be converging. Thanks to Lightning working as a common language, it makes bitcoin interoperable with a wide range of adjacent technologies, like USDT. And USDT is going to turbocharge bitcoin into new use cases, new markets, and new challenges on a scale that the Lightning ecosystem has yet to experience.Given the choice, I’d rather dive head first into the unknown than spend the afternoon on the couch. All the cool stuff is in the unknown. (Image: pxhere)USDT on Lightning is terra incognita. Interesting times indeed. So let’s think about what it means for USDT to join Lightning and for Lightning to move USDT — the opportunities, the risks, and the wide open questions.Lightning was originally intended to increase the throughput of the bitcoin blockchain, so bitcoin was to be its only cargo. Taproot Assets is a new protocol that allows fungible assets (e.g. stablecoins) to be transmitted over Lightning as hashed metadata piggybacking on the same infrastructure used to process bitcoin payments.The way it works is pretty simple for anyone who understands Lightning. The recipient generates an invoice that pings edge nodes (i.e. the nodes connecting users to the broader network) for exchange rates between bitcoin and the asset in question — USDT in the current case. Once the user accepts an edge node’s exchange rate, they generate an invoice for the payment and send it to the payer. The payer sends the asset to the edge node on their own side, the edge node converts everything into a normal-looking bitcoin payment, the payment proceeds through routing nodes along the network as usual, the edge node on the recipient’s end converts the payment back into the original asset (USDT) and forwards it to the recipient.Taproot Assets leverages the versatility of Lightning and bitcoin to let users transfer new kinds of assets over the network, using bitcoin as the universal medium of exchange. One corollary of all the nodes speaking Lightning is that any routing nodes between the edge nodes see only BTC in transit. Lightning tells them how to move BTC, and that’s all they’re doing as far as they know. Awesome. But there’s more to it than just
USDT on the Lightning Network: the Pros, Cons, and Uncertainties
