Payment Giants Threatened by Stablecoin Adoption
Payment giants like Visa and PayPal are at risk of losing their dominance in the industry as stablecoins, such as Tether, gain popularity. Here are the key points to consider:
– Stablecoins, which are dollar-pegged assets on the blockchain, offer advantages over traditional payment methods.
– According to a report, stablecoins are becoming a growing threat to companies like Visa and PayPal.
– In addition to being used for cryptocurrency investments, stablecoins are increasingly being used for payments.
– Stablecoins settled over $11 trillion on the blockchain in 2022, almost reaching Visa’s volume of $11.6 trillion.
– More than 25 million blockchain wallets hold stablecoins, with 80% of them holding $100 or less.
– PayPal’s announcement of its own stablecoin did not generate much enthusiasm, possibly because stablecoins are more popular outside of the United States.
Global Financial Services and Advantages of Stablecoins
Stablecoins have the potential to provide global financial services to customers who are underserved by traditional financial institutions. Consider the following:
– Stablecoins can offer basic, dollar-based financial services to almost anyone with an internet connection.
– Stablecoins provide faster and cheaper transactions compared to traditional payment methods like PayPal, which charge high fees and forex spreads.
– However, stablecoins face regulatory hurdles, particularly in the US, where the crypto industry has faced challenges this year.
While stablecoins offer advantages, they also face competition and regulatory challenges. Here are the numbers to know:
– Tether remains the dominant stablecoin in the industry, with 83 billion USDT in circulation and a market share of nearly 67%.
– Circle, the second-largest stablecoin, has seen its supply decrease by over 40% since the beginning of the year, with 26 billion USDC in circulation and a market share of 21%.
– The decentralized stablecoin DAI holds a market share of just over 3%, with a supply of 3.9 billion.
– Binance USD (BUSD) has faced regulatory pressure, causing its supply to shrink by 80% since the beginning of 2023.
Hot Take
The rise of stablecoins poses a significant threat to established payment giants like Visa and PayPal. With their advantages of global financial services, faster and cheaper transactions, and increasing adoption, stablecoins are reshaping the payments landscape. However, regulatory hurdles and competition within the stablecoin market remain challenges to overcome.
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