Galoy Raises $4 Million to Develop Its Core Bitcoin Banking Platform
- Galoy is the company that owns the open-source banking platform powering El Salvador’s Bitcoin beach wallet.
Banking platform, Galoy, announced the launch of its Stablesats product on Wednesday. From its inception, Galoy’s Stablesats allows users to use lightning for daily financial transactions without exposure to the volatility of crypto prices. The company also raised $4 million from investors to further develop the core of its Bitcoin banking platform, GaloyMoney.
Stablesats uses derivatives contracts to create a Bitcoin-supported synthetic Dollar. However, this synthetic Dollar is pegged 1:1 to the US Dollar. Galoy believes that the solution to the short-term volatility price risk associated with Bitcoin is to allow Dollars to flow through it.
This risk is the biggest obstacle to using Bitcoin for casual payments. Galoy CEO, Nicolas Burtey, said unbanked communities in Africa, America, Latin America, and other places with more bankless populations can now make seamless digital transactions due to the availability of Bitcoin.
Burtey admitted that it is difficult to manage financial obligations with Bitcoin because of its high volatility. However, he added that users of the Stablesats-enabled lightning wallets could send, receive and hold money in a USD account besides their default BTC account. Even if there is a fluctuation in the Dollar value of their BTC account, the $1 in their Dollar account remains the same no matter the exchange rate for Bitcoin.
Galoy and the Market Outlook
In the announcement for Stablesats, Galoy also revealed that it raised $4 million to aid the development of its Bitcoin banking platform (GaloyMoney). This platform will make it easier for organizations to enable lightning payments.
The versatile API (Application Programming Interface) is an enterprise-ready lightning network gateway. The top participants in this fundraising round were Hivemind Ventures, AlphaPoint, Valor Equity Partners, Trammell Venture Partners, Timechain, Kingsway Capital, and El Zonte Capital.
Hivemind ventures CEO, Max Webster, commented that Galoy makes it easy for any organization or community to become a bank of its own. He added that it is the first open payments and monetary standard worldwide. Webster further said that the Galoy platform could become the ‘Schelling’ point for the banking software because it is open-source and will greatly benefit from the flywheel effect.
A flywheel effect means it stacks up small wins over time until it gains enough momentum for its growth to happen automatedly. The Hivemind CEO added that the platform would become more secure and reliable, and its capacity would increase through each new customer’s implementation.
As an open-source platform, the basic code for Galoy’s Stablesats is always available on Github and its custom website. Also, the specific methodology of how Stablesats works as a Bitcoin-backed synthetic Dollar is available there. Stablesats uses the perpetual inverse swap to create the synthetic US Dollar through the synthetic futures contracts. This inverse swap is a financial tool developed by the crypto exchange, BitMEX.
Futures contracts are agreements to purchase or sell a specific digital asset like BTC for a specific amount on a set date. The difference between perpetual and standard futures contracts is that the former doesn’t set a future date for the transaction.
Rebecca is a Senior Staff Writer at BitcoinWisdom, working hard to bring you the latest breaking news in the cryptocurrency market. In the words of Elon Musk “Buy stock in several companies that make products & services that *you* believe in. Only sell if you think their products & services are trending worse. Don’t panic when the market does. This will serve you well in the long-term.”
