Stablecoins To Rise from a Buffer Role to Backend

Stablecoins are widely predicted to rise to a new role in the years to come. In his blog on Medium, David Beiner describes the way that is likely to be chosen for stablecoins.

This class of cryptoassets is a part to the triad of the hottest topics in the cryptodiscourse, outside scaling solutions and institutional involvement.

Currently, there are 29 working stablecoins registered, by many more pop up almost daily, backed by major VCs. The latter are attracted by the simple value proposition and clearly addressable market segment. Major names are Gemini Dollar, Paxos Standard, USDC.

They started as a bridge between traditional financial institutions and those who opt for a more open financial system.

But the focus is the use of stablecoins will shift from being a buffer between crypto and fiat to backend.

Most stablecoins are built upon Ethereum network, that provides significantly lower transaction fees then banks do.

Japan considers stablecoins to be prepaid money instruments.

Stablecoins do not provide censorship resistance, but they enable programmable transactions and verifiable history.

Further to low transactions fees, the speed of remittance is higher. With seamless UI, such apps are just around the corner.

Hence, a use case is to have a payer upload cash via app, and without even knowing that the funds will be converted into ETH based tokens while on the other end converted back into the currency of the receiver.

To widen the process, an employer who sends the money may leave to receivers to convert the tokens into the local currency or leave it in order to create an ecosystem of providers.

When a stablecoin is used in the backend, a payer and a payee will not be aware of it. Here Ethereum is used as a mechanism.

SWIFT becomes obsolete, manh developing countries lack infrastructure for remittance, hence there may be a very wide market opportunity for stablecoins, if not the whole new market will be created.