Stablecoins Preferred Over Bitcoin in Struggling Economies
As more people embrace cryptocurrencies like Bitcoin for financial security, it has become evident that not everyone can afford to invest in volatile digital assets. Former NFL player and Bitcoin advocate Russell Okung recently shared his experience of promoting the Lighting Network in Africa, sparking a debate about cryptocurrency adoption on social media. Okung discovered that people in Africa were more interested in dealing with stablecoins like USDT instead of Bitcoin, despite his efforts to promote the flagship cryptocurrency. Many members of the crypto community, including podcaster Peter McCormack, shared similar experiences in countries like Argentina and Lebanon.
Preference for Stable Assets in Struggling Economies
In underdeveloped or struggling economies, individuals tend to gravitate towards more stable assets. The exposure to a currency like USD through stablecoins provides a better and more secure option than their devalued national currencies. A recent report from the Mexican crypto exchange Bitso revealed that stablecoin adoption is preferred over Bitcoin in countries like Argentina and Colombia. The struggling economies in these countries make stablecoins like USDT and USDC more appealing to users than Bitcoin. Short-term necessities often outweigh any long-term benefits of holding Bitcoin as a store of value in these economies.
Stablecoins: A Stepping Stone for Crypto Enthusiasts
Austin Campbell, Founder & Managing Partner of Zero Knowledge Consulting, shared his view on Okung’s post. Campbell noticed a similar adoption pattern during his time at Paxos, where people preferred USD stablecoins as a digital asset to hold their money. He believes that this behavior aligns with understanding Bitcoin as a store of value rather than an everyday-transaction cryptocurrency. Campbell draws a comparison between gold and Bitcoin, explaining how people don’t use gold to pay for everyday items but store it and occasionally sell it for more liquid fiat currency. Similarly, stablecoins serve as a stepping stone for individuals in local financial systems, providing an upgrade compared to most local systems in many countries.
Angel investor Stephen Cole also expressed a similar view, considering stablecoins as an important part of the journey towards Bitcoin replacing fiat money. He sees stablecoins as a lifeline for many facing hyperinflation who are not in a position to think about long-term saving.
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