Technological advancements and innovations are transforming our financial services and products. In recent years we have witnessed a significant change in the payment services industry in particular, as a consequence of the introduction of new payment methods as well as new platforms, interfaces, and other assets to the marketplace.
Despite this cross-border payments remain slow, compared to the increasing number of immigrant workers there is no viable centralised solution in sight that can facilitate them. The global remittance market is worth well over $680 billion and is projected to cross $1 trillion in a few years; however, the regulated system remains expensive, slow, and opaque. Furthermore, about 2 billion people in the globe are still unbanked or underserved in terms of financial services, according to the World Bank. The discriminating process of overly centralized institutions limits people from getting something as basic as a bank account.
This is why cryptocurrencies were initially introduced. Cryptocurrencies were introduced to bank the unbanked. They envisioned addressing the challenges and drawbacks of existing financial institutions. However, today, Cryptocurrencies have suffered from a number of drawbacks themselves. While cryptocurrency solutions may solve a lot of problems; however, the leading projects have scalability issues, interoperability issues, and sustainability issues.
Moreover, cryptocurrencies also suffer from some of the most unpredictable price volatility and sensitivity to speculation. A single tweet from a celebrity, legislation from a government, or a move from an institutional player could lead to aggressive shifts in the price of a crypto asset.
There is no disputing that blockchain has the potential to have a significant impact on almost every sector. Among plenty of its emerging use-cases, blockchain technology aims to establish new and improved payment systems that are impenetrable from risks such as malicious users and is easy to use, transparent, decentralized, quick, and use crypto assets at the core of every one of its systems.
However, the emergence of meme-coins puts the volatility of the market into perspective. Even leading cryptocurrencies such as Bitcoin could project a high of $65,000 and then drop down to $30,000 in a single month.
While cryptocurrencies envision globally secure, decentralized, and stable digital assets;, the market is notorious for being volatile and speculative. These factors play into how much the market can be unpredictable, risky, and unsafe for upcoming investors and especially as a legal tender and sole medium of exchange for goods and services.
We shouldn’t forget the Cryptocurrency industry is still in its nascency. This basically means that it has a lot of room to grow. Issues with interoperability, scalability, sustainability and volatility don’t go unnoticed within this sector. Platforms, projects, developers, and the community are actively trying to fix these issues.
Fortunately, we might have a solution to the rising issue: Stable coins.
Stablecoins: A solution in the waiting
Cryptocurrencies are notoriously volatile. You might wake up one day and find yourself a millionaire, and the next day you could find yourself with nothing. There’s a reason why most governments around the world are strict with the asset.
One could say that the reason why Cryptocurrencies haven’t broken into mass adoption is because of their volatility. Cryptocurrencies are far from being used as a sole medium of exchange for goods and services.
Interestingly, the underlying technology, Blockchain, isn’t volatile. It’s the main feature that gives Cryptocurrencies their value. The decentralization, immutability, and features offered by blockchain technology helped birthed around 11,000 unique cryptocurrencies today. Since one of the biggest barriers between Cryptocurrencies and mass adoption was its infamous volatility, the cryptocurrency ecosystem went ahead and established a solution to the problem via Stablecoins.
Unlike Cryptocurrencies, Stablecoins have a fixed value. Stablecoins are digital assets collateralized by an underlying asset. This asset could be anything from precious metals such as gold and silver to fiat currencies such as the US Dollar and European Euro.
Stablecoins changed the game for the crypto industry because, at its core, they’re cryptocurrencies with a fixed value. Stable coins are based on blockchain technology like cryptocurrencies; they experience many of the same benefits of blockchain technology such as transparency, security, privacy, and accessibility without the volatility inherent in literally every other cryptocurrency there is.
The digitization of money thanks to cryptocurrencies
The stable coins market today is well over $115 billion. Because they’re not subject to the cryptocurrency market’s volatility, they bring a whole new ecosystem to the table. Stable coins are used like any other currency there is. They’re the new form of digital money. They could be used for exchange; they could be used for mainstream commerce; they could be used to access decentralized finance. Simply put, with stable coins, you could benefit from the best of both worlds.
Thanks to stable coins, people can finally put out their phones, scan a QR code, and pay for their morning coffee with cryptocurrencies. Hotels, businesses around the world are embracing cryptocurrencies as a means of payment for their thanks to stable coins. Thanks to stable coins, we can use cryptocurrencies the way they were meant to be used. Stable coins really digitized our money, and we couldn’t be any more fortunate.
Food industry giants such as Restaurant Brands International and Yum Brands have started accepting cryptocurrency payments in various parts of the world. Tech giants such as Xbox, Payment giants such as Paypal, e-commerce giant Amazon all have embraced cryptocurrency payments.
International economies such as El Salvador have gone ahead and crowned Bitcoin as their legal tender. El Salvador’s step towards financial inclusivity was soon mirrored in the Latin part of the world by Paraguay, Panama, Brazil, and more. Crypto projects around the world are working in parts of Africa to digitize money. Moreover, Cryptocurrencies have seen mainstream adoption in Ukraine, Sweden, and other European countries. Cryptocurrencies are at the forefront of the financial world.
With more and more businesses and companies, organizations, and international economies embracing cryptocurrencies into their business model, international trades, we could soon see Cryptocurrencies replace fiat currencies. With the introduction of DeFi products such as Crypto ETFs, Tokenized Stocks, NFTs, among others, and the emergence of the DeFi sector, we could soon reach a future where the asset will change our lives for the better.
Stable coins have already shown to be very useful for making international payments. Since people don’t have to go through overbearing fees from centralized institutions for converting their currencies, a person in one part of the world could receive USD-backed stable coins without converting them and losing a ton of their money to fees.
Stable coins and cryptocurrencies show great promise in a variety of diverse financial services. Stable coins have seemingly changed the lives of millions of families that live in developing countries. With rapid transactions, low fees, Stable coins and cryptocurrencies finally allow emigrant workers and their families in different parts of the world to use digital wallets and instantly receive stable coins.
With the rise of the cryptocurrencies industry and how it digitizes our money, it’s understandable that countries around the world have to show friendliness to the industry. The emergence of Decentralized finance, catalyzes and established by cryptocurrencies, has allowed anyone with an internet connection and smart device to access financial services without going through the discriminating process of traditional financial systems.
Interestingly, Cryptocurrency banks are gaining a stronghold over traditional banks, and they’re posing risks to central banks around the world. Despite how much of a risk the cryptocurrency industry poses, taxes need to be paid, and governments need to be run, which is why we could eventually see centralized institutions embrace blockchain solutions.
Countries like Portugal, Malta, Singapore, Germany, and more are already trying to regulate and embrace cryptocurrencies. Soon, we could also see Central Bank Digital Currencies which would provide much of the same benefits of blockchain technology to rival DeFi Systems.
The digitization of money thanks to cryptocurrencies is forcing Commercial and Central banks to stand up and provide better value to their users; however, as the public becomes well-versed with cryptocurrencies and decentralization, we could more likely see Cryptocurrencies dominate our traditional systems.
Central Banks Digital Currencies (CBDC):
Blockchain technology might eventually replace banking and finance with a more efficient digital decentralised economy, according to the majority of the bitcoin community. While it’s uncertain whether that will happen or not, mainly because Banking and governments hold a lot of power in our economies, and it may be a far cry to believe that cryptocurrencies will completely replace them.
Central Banks Digital Currencies (CBDC) provide an alternate to decentralisation of financial assets. Governments are trying to find ways and mechanisms to make money easy to spend and transfer, while keeping the flow of money centralised. A digital currency issued by banks could be an answer to that. The concept of a Central Bank Digital Currency is exactly that. Global leaders like China and European countries are trying hard to launch their own versions of a centrally banked digital currency which will pose as a viable alternative to decentralised currencies.
Cryptocurrencies are digitizing money and countries, be it stable coins or central bank digital currencies; it’s impossible to stop the crypto revolution after seeing how much better it is than our traditional system and how fast the sector is developing.
As more people, countries, and economies accept cryptocurrencies, what do you think? Will we see a completely decentralized or digitized form of money in the near future?