Ever since the first digital currency was established in 2009, we have not stopped witnessing new innovations in the finance sector. Stablecoins are just a part of the innovations. Just like the name suggests, the idea is to peg digital currencies to stable traditional currencies like the US dollar to protect investors from volatility issues associated with crypto. The continued adoption of stablecoins is the reason why Bernstein anticipated its market to hit $3 trillion by 2028, up from $130 billion at the end of 2023.
Well, you can actually agree that innovation has become the order of the day – not only in the finance sector but in other areas of life as well. Mobile technology, for instance, has greatly transformed how we access various services including trading, banking, and so on. Like now, with just a simple Bybit app download, you can access a variety of trading information from any place at any time so long as you are connected to the internet.
The appeal of blockchain technology
As we said, our contemporary world is often characterized by innovation, and any upcoming technology that can improve life is usually readily welcomed. Blockchain is just one of the many examples. In the US alone, more than 38% of workers confirmed the use of blockchain in their businesses as of early 2023.
In other countries like India, this technology has been its way across various sectors. For example, the release of the National Strategy on Blockchain, which highlighted India’s intention to adopt blockchain in different sectors, including agriculture and finance, confirmed the government’s support for this technology. The plan was actually to make available a ‘Made in India’ blockchain technology for global use by 2027. Such moves are the reasons why the global market has reached $27.84 billion, with Fortune Business Insights anticipating it to reach $825.93 million by 2032
Well, you may be wondering why many governments and sectors are opening up to this technology. It is not wrong to get concerned. Blockchain is built on a distributed ledger that ensures transactions are not centrally managed but decentralized. Such possibilities are very useful in industries like iGaming, where privacy, anonymity and fairness are highly sought after. Before a new block is added, all nodes in the network must consent to it being incorporated with the former block in the chain.
Countries implementing stablecoins
Just recently, in 2023, PwC conducted a study that involved 43 countries and found that 25 already had stablecoin regulations in place. Part of the 25 countries include Denmark, Switzerland, Spain, Japan, Sweden and many others. Most of these countries have enacted other regulations like crypto regulatory frameworks, licensing and so on. By that time, countries like India, Bahrain, Taiwan and Turkey had not initiated any regulations around stablecoins.
Fast forwarding to September 2024, Yahoo Finance published a report that revealed a growing adoption of stablecoins in Brazil, India, Turkey and Indonesia. The study was based on 2500 crypto users and found that 69% had exchanged their local currencies for these coins. Another 39% had used the token to transact and send money to individuals (relatives) in other countries. As if that is not enough, 23% had used stablecoins to either pay or receive salary.
Most of these users said they preferred the token on blockchain over the USD as that was more efficient and could less likely be interfered with by the government. For those who used Tether, it was convenient because of its network effects and unparalleled track record compared to other stablecoins. Who knows? Maybe these statistics point to a new future as people are now not only using the tokens for crypto trading but for other uses like savings as well.
What does the future look like?
Thanks to key industry players like Jeremy Allaire, stablecoins are now receiving significant welcome in the mainstream finance. It is the belief of Allaire that one day billions of people will own USDC, the second most popular stablecoin, and use it to support economic activities worth trillion of dollars.
Like many others, this global leader believes that such innovations will help address the global challenge of financial exclusion as the world seeks to become inclusive. By the way, do you know that only 76% of the world’s adult population owns an official account, according to FinDev Gateway? As nations grapple with the issue of financial inclusion, we might see more adopt this token as one of the corresponding measures.
Regionally, countries like the US and Switzerland seem to be leading the stablecoin space. In fact, the United States homes some of the most-popular stables like Tether. However, Sofian Berrahal, chief business officer at Next believes that Europe might be the next global destination for these tokens. Especially after MICA revealed intentions to regulate issuers of the token and to widen the net of institutions that issue their own stables, we might see this content ranking among the top positions in the future.
Final thoughts
As you can see, the need for more efficiency has welcomed blockchain technology in many sectors, including the finance industry. And it is not just the finance industry alone – others, including online entertainment, are opening up to this technology. Well, as we work towards an inclusive society, will stablecoins offer the convenient solution to get us there?
