5 Practical Uses of Stablecoins Today
The rise of stablecoins is slowly but surely. To date, it has reached over billions of dollars in supply, and its monthly transaction volume is over a hundred billion in dollars as well. Contrary to Bitcoin, Stablecoin presents a rosy future in opportunity for digital assets to grow into daily financial services.
Big wigs like PayPal and Facebook support are responsible for the emerging solid reputation of stablecoins in central bank digital currencies. Stablecoins are poised to utilize these company’s resources to facilitate payment and offer other financial services. Stablecoin, like the Celo Coin is a cryptocurrency that links its value to a real-world asset, the US Dollar. It can also be assets like gold, platinum, or real estate.
Naturally, there are several hurdles, especially on regulations, privacy, and user assurance. However, a mutual agreement on these prospects can make or break the industry and should merit a discussion and a step-by-step approach.
The origins of Stablecoin
The initial Stablecoin emerged in circulation around 2014 as a response to the high volatility of Bitcoin and other cryptocurrencies. Ethereum and Bitcoin are so unstable that their value changes overnight, a nightmare for any traditional investor. There was a clamor for a stable cryptocurrency that makes money transfer possible within the crypto world, thus the birth of Stablecoin. They also utilize blockchain technology. Ironically Ethereum’s blockchain is a popular medium to launch Stablecoin. Initially, Stablecoin users are crypto enthusiasts and traders. Today, users are composed of investment bankers and asset managers. Here are five uses of Stablecoins today.
In this day and age, millions do not have access to banks and do not own a bank account. Internet access and connection are the only requirements in Stablecoin. Users can reap the benefits of secured assets and banking features without the limitations of banking hours. Stablecoin can also offer banking tools and features to companies that can not access accounts or have enough capital.
Sending money overseas and cross-border payments are very cost-intensive. High fees are the plight of numerous migrant workers in Asia that send money home every month. International transfer fees typically cost over half a day worth of wages. Stablecoin, in collaboration with blockchain solutions, can solve the high fees in remittance due to its price stability.
Payment settlement reflects real-time with Stablecoin. In addition, they are not limited by banking hours because they operate 24/7 that runs through blockchain technology. As a result, receiving parties can instantly enjoy compensation in real-time.
The lending aspect of Stablecoin offers high-yield opportunities to debt investors with double-digit interest rates backed by Stablecoin’s success in trading.
Highly secured asset
The value of Stablecoins is created to be safe, stable, and secured over time. Unlike Bitcoin, Stablecoins are safe from fluctuations that can wildly change overnight. In this way, users are assured of full custody of their assets without the risk of losing them. Thus, stablecoins are both price-stable and self-custodial.
To date, Stablecoins are widely used in payment gateways and remittances flowing in and out of crypto for banks, financial institutions, and asset managers. Most Stablecoins are redeemable for actual fiat money in bank accounts. A digital representation of fiat currency, stablecoins have developed as an asset in digital form. It is the most stable and safe alternative to the popular cryptocurrency today.