a boon for emerging markets?

One-click dollars on the Lightning Network may soon become a reality. An innovation from Galoy, the provider of open-source core banking platforms such as the Bitcoin (BTC) Beach Wallet, could provide a safe haven from BTC volatility.

The innovation, called Stablesats, uses derivative contracts to create a synthetic dollar backed by Bitcoin and pegged to the USD. Galoy founder Nicolas Burtey told Cointelegraph in a way that he “explains like I was five years old” that the wallet works like this:

“When we receive sats on Lightning, we convert them to dollars so that even if the Bitcoin price changes, the user is not affected by liability.”

But why do we need dollars inside a lightning wallet? Isn’t that what stablecoins are for? Indeed, stablecoins such as USD Coin (USDC) and Tether (USDT) already offer the functionality of synthetic or digital dollars.

In a YouTube video, Burtey explains that “lightning [Network] is the best payment protocol there is, so instead of using all these different payment protocols that stablecoins use. It keeps users in one place within an app or wallet. According to the website, “Stablesats relies solely on the Bitcoin payment network to operate.”

The idea was built on a suggestion from Bitmex in 2015 to create a synthetic USD. However, in a press release, Burtey suggests that the idea may have been before its time: there was no Lightning Network and no state adoption of Bitcoin.

As Bitcoin continues to make waves in emerging markets, price volatility is often questioned. For example, the head of the Bank of England claims that Bitcoin is too volatile to be legal tender. The ease with which users can now access dollars goes against this argument. Burtey told Cointelegraph he summed up the situation:

“Because lightning gets a lot of attention in developing countries, but it’s also where people live paycheck to paycheck. So they can’t necessarily afford the volatility so much that they failed to save money.

As Cointelegraph reports, U.S. dollar-pegged stablecoins are “viable alternatives” in emerging markets, and their appetite is growing in countries with high inflation and unstable regimes. Innovation on the Lightning Network gives users another way to gain exposure to the dollar.

Sebastien Verreault, the main contributor to the Stablesats GitHub repository, explained that exposure to the dollar is only a first step: “Ultimately, we can unlock the possibility for each Lightning user to choose their own units of account without ever leaving the network.”

Related: Busking on Bitcoin: How Lightning Network Surpasses Ethereum for Tips

Galoy is behind the Bitcoin Beach wallet in El Salvador, the Bitcoin Jungle app in Costa Rica, and the Guatt wallet in Panama, which has yet to be released. The Bitcoin Beach Wallet is the most popular wallet in El Zonte, the heart of Bitcoin adoption in El Salvador.

Nicolas Burtey (right) with central bankers explaining the Bitcoin Beach Wallet in May. Source: Twitter

Central bankers from around the world tried the Bitcoin Beach Wallet during a visit to El Salvador in Ma this year.