👊 Beat the dollar

Rootstock, per co-founder Diego Gutierrez-Zaldivar, was built to graft programmability onto Bitcoin without changing Bitcoin.

“We were discussing how to extend Bitcoin to become a full-fledged financial system.”

That quickly runs into the volatility problem, so, in Gutierrez-Zaldivar’s words, “we will need something like stablecoins.”

Typical centralized stablecoins are more like issuer IOUs — each token technically redeemable for a US dollar via the issuer itself.

That process often comes loaded with terms and conditions, even region blocks.

Rootstock’s model instead sees users lock their bitcoin into a smart contract on its sidechain in return for a dollar-pegged token, which can then be redeemed directly via code.

The design is intended to avoid dependency on secondary markets and to minimize counterparty discretion in redemptions.

Still, policy moves like the US stablecoin framework may flood the market with fiat-backed tokens. 

Diego’s advice to banks is to anchor on Bitcoin instead: Run a rollup or controlled L3, use Rootstock for data availability and keep your internal rules while outsourcing finality to proof-of-work. 

“If you are a bank and you are relying for your back-end on a system that is controlled by a third party, [that’s a] huge liability,” Gutierrez-Zaldivar told host Pete Rizzo.

He agrees the market structure is changing, however, but warns about leverage and “copycats” of high-profile treasury plays, like the ones running the Strategy playbook.

If those blow up, sentiment suffers. “Usually, you know, decentralization and sovereignty are things that you only value when you have a crisis.”

Full episode on YouTube, Spotify, Apple Podcasts and X.

This newsletter was created with assistance from AI tooling.

• BTC/USD is bouncing off a nearly seven-week low of $108,670 on Coinbase. Current price: $110,340.

• ICYMI: Arkham has identified 6,335 BTC ($696.2 million) mined and held by UAE-majority-owned Citadel Mining. 

• Strategy now owns 3% of bitcoin’s total 21 million supply. Current balance: 632,457 BTC ($69.8 billion).