Stablecoins Will Change the Way You Approach Cross-Border Payments

It takes an average of $ 13 to send $ 200 to another country and three to five business days to complete a transaction. 23% of consumers who make international payments to family or friends use at least one type of cryptocurrency. 13% of them even say that cryptocurrencies are the preferred way to transfer money. However, the winter of cryptocurrencies (aka the bear market) has arrived. Bitcoin plummeted by around 80% in 2018 and 2020, and Bitcoin lost 70% of its value. Stablecoins are a type of cryptocurrency whose value is tied to an external asset, such as the US dollar.

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Alla Zhedik

Alla, CEO of Tempo France. Proven history of work in the banking sector.

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Given that it takes an average of $ 13 to send $ 200 to another country and three to five business days to complete a transaction, it’s no surprise that 23% of consumers making international payments to family or friends use at least one type of cryptocurrency. And 13% of them even say that cryptocurrencies are the preferred way to transfer money.

If you think these numbers aren’t high enough, let me tell you something: Cryptocurrency usage is rapidly increasing, as evidenced by over 100% annual growth. Simply put, cryptography has a much faster adoption than the internet during the early 2000s. And this is because, in addition to creating new investment opportunities, blockchain technology speeds up international payments and minimizes costs by eliminating the intermediaries involved.

However, the winter of cryptocurrencies (aka the bear market) has arrived. For example, Bitcoin plummeted by around 80% in 2018 and 2020. And the most popular cryptocurrency in the world recently faced the same situation again: after hitting a record $ 69,000 in November 2021, Bitcoin lost the 70% of its value.

The high volatility suggests: will I lose money during a Bitcoin transaction?

The truth is, seconds matter in the blockchain world, just like the stock market. Many traders are actually using this method and are watching every second to make a profit. However, if your goal is to send or receive money on a blockchain platform, volatility can sometimes put a spanner in the works. This is when stablecoins come into the picture.

Now is the time to see how stablecoins can be a safety net during the cryptocurrency winter and help more people adopt blockchain payments.

How do stablecoins differ from other cryptocurrencies?

When it comes to cryptocurrencies, Bitcoin and Ethereum are the first names that come to mind, but stablecoins are an important subset of the $ 190 billion ecosystem. Simply put, a stablecoin is a type of cryptocurrency whose value is tied to an external asset, such as the US dollar or gold, to stabilize the price. Since these coins are “stable”, users do not lose money during a transaction.

Although Tether (USDT), USD Coin (USDC), and Binance USD (BUSD) are some of the best stablecoins, there are nearly 200 different stablecoins around the world, according to the Blockchain Council. Therefore, it is wise to do your research before choosing a blockchain platform for your cross-border payments because there are numerous Ruja Ignatovas out there.

If you haven’t heard of Ignatova, she was accused of stealing more than $ 4 billion and added to the FBI’s top 10 most wanted list. According to FBI agents, the coin she was promoting, OneCoin, wasn’t even safeguarded by the blockchain technology used by other platforms.

Fortunately, as the cryptocurrency market continues to grow, there will be more regulated coins to prevent this unwanted situation. Take USDC as an example. This regulated currency has reserves compliant with state licenses and proven stability.

Why will more people choose blockchain payments in the future?

The answer is simple: Blockchain payments are cheaper, faster and more secure.

Let’s say you live and work in Germany and want to help your family in Nigeria. The Nigerian government has a policy that recipients cannot get euros, which means that the money must be converted into Nigerian Naira.

The fact of the matter is that the exchange rate offered by the Nigerian government is below the market rate, which means that both you and your family lose up to 10% money during the transaction. If the same transaction is performed on a stablecoin blockchain platform, you will only pay 2% for the transaction fee and your family will get a better exchange rate.

Blockchain solutions can also speed up business payments. Imagine how stressful it is to send six-digit numbers to your partner abroad. First of all, there is a lot of paperwork involved. Secondly, it will take three to five days before they actually receive the money. All this can be done in minutes thanks to blockchain technology without dealing with paperwork.

If you have doubts about the validity of cryptocurrencies, remember that the maximum transparency of the blockchain’s features ensures that nothing disappears and that all transactions can be tracked. Therefore, if someone gets involved in illegal activities, it is easier to catch them. And since crypto transactions remain relatively niche, users have to withdraw money to a bank account. If there is a large transaction going on, the bank will start asking questions and alerting the police.

To conclude, whether you are an individual or an entrepreneur, stablecoins can help you save time and money during a cross-border transaction without having to worry about the volatile nature of cryptocurrencies.

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