Several reports on the performance of dollar-backed digital currencies suggest that crypto wallets containing stablecoins will eventually replace credit cards. The appetite for dollar-backed stablecoins in payments is increasingly surprising and could even pose a threat to the business model of traditional payment companies like Visa, PayPal and MasterCard. What are traditional payment companies saying about this silent competitor?
More than $11,000 billion in transactions made using stablecoins
Considering the relative security they offer in a world scourged by uncontrollable inflation, stablecoins have quickly become an alternative to protect the value of digital assets and preferred entry points into the world of digital currencies.
Today, dollar-backed stablecoins have won the hearts of users, garnering increasingly large volumes of transactions. A report published by the press this August 23 reveals that stablecoins have been used to process more than $11 trillion in 2022 via blockchain.
This figure far exceeds the transaction volumes processed by PayPal on the one hand and is close to the $11.6 trillion in transactions processed by Visa on the other. We understand why MasterCard wants to stay at the forefront on issues related to stablecoins.
Additionally, over 25 million wallets on the blockchain contain more than $1 worth of stablecoins, while over 80% of these wallets contain around $100 worth of stablecoins. If blockchain were a bank with 25 million accounts, it would be the 5th largest bank in the USA. Go and understand why the United States suddenly decided to recognize stablecoins as a form of currency!
Stablecoins: the ideal alternative for cross-border transactions?
The volume of transactions settled with stablecoins in 2022 suggests that blockchain technology holds the key to revolutionizing financial services on a global scale. Dollar-backed digital currencies offer an alternative platform improving access for underbanked populations to financial services and faster, more economical transactions.
Recall that the global payments giant, PayPal, launched its own stablecoin, PYUSD, at the dawn of this month in collaboration with the blockchain company Paxos. Unfortunately, the price of PYUSD has seen an 18% decline since then. Some analysts say that stablecoins have a general tendency to be more popular outside the United States than within it.
Regardless, the future of stablecoins will depend above all on the establishment of clear regulations on digital assets. This will prevent stablecoins from seeing their value simply crash, as was the case with Binance’s BUSD which has lost nearly 80% of its value since the affair with the SEC, leaving Tether USD to dominate, USD Coin and DAI which respectively hold 67%, 21% and just over 3% market shares.
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