Given that it takes an average of $13 to send $200 to another country and three to five business days to complete a transaction, there is no surprise that 23% of consumers who make international payments to family or friends use at least one kind of cryptocurrency. And 13% of them even say that cryptocurrencies are their preferred way of money transfers.
If you think that these numbers are not high enough, then let us tell you something – cryptocurrency usage is rapidly increasing, as demonstrated by over 100% annual growth. Simply put, crypto has far faster adoption than the internet during the early 2000s. And that is because, besides creating new investment opportunities, blockchain technology speeds up international payments and minimizes costs by eliminating intermediaries involved.
However, the crypto winter (aka the bear market) is here. For example, Bitcoin crashed by approximately 80% in 2018 and 2020. And the world’s most popular cryptocurrency has recently faced the same situation again: After reaching a record of $69,000 in November 2021, Bitcoin has dropped 70% of its value.
The high volatility makes one think: Will I lose money during a Bitcoin transaction?
The truth is that seconds matter in the blockchain world – just like the stock market. Many traders are actually using this method and watching each second to make a profit. However, if your goal is to send or receive money on a blockchain platform, volatility can sometimes throw a spanner in the works. This is when stablecoins enter the picture.
Now’s the time to look at how stablecoins can be a safety net during the crypto 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 $190 billion subset of the ecosystem. In a nutshell, a stablecoin is a type of cryptocurrency whose value is tied to an outside asset, such as the U.S. 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 almost 200 different stablecoins worldwide, according to the Blockchain Council. Therefore, it is wise to do your own research before choosing a blockchain platform for your cross-border payments because there are numerous Ruja Ignatova's 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 wanted list. According to FBI agents, the coin that she was promoting, OneCoin, was not even safeguarded by the blockchain technology used by other platforms.
Luckily, as the cryptocurrency market keeps growing, there will be more regulated coins to prevent this unwanted situation. Take USDC as an example. This regulated coin has reserves that comply with state licenses and a proven record of stability.
Why will more people choose blockchain payments in the future?
The answer is simple: Blockchain payments are cheaper, faster, and safer.
Let’s say you live and work in Germany and want to help your family in Nigeria. The Nigerian government has a policy that the recipients cannot get Euros, which means that the money must be converted into Nigerian Naira.
The crux of the matter is that the exchange rate that the Nigerian government offers is lower than the market rate, meaning that both you and your family lose money up to 10% during the transaction. If the same transaction is done on a stablecoin blockchain platform, you will pay as little as 2% for the transaction fee, and your family will get a better exchange rate.
Blockchain solutions can speed up business payments too. Just imagine how stressful it is to send six-figure numbers to your partner abroad. First of all, there is a lot of paperwork involved. Second, it will take three to five days before they actually receive the money. This all can be done in a matter of minutes thanks to blockchain technology without dealing with paperwork.
If you have any doubts about crypto validity, remember that blockchain’s greatest feature transparency ensures that nothing disappears and all the transactions can be tracked. Therefore, if anyone gets involved in illegal activities, it is easier to catch them. And as crypto transactions remain relatively niche, users need to withdraw money to a bank account. If there is a big transaction taking place, the bank will start asking questions and alert the police.
To conclude, whether you are an individual or a business owner, stablecoins can help you save time and money during a cross-border transaction without having to worry about the volatile nature of cryptocurrencies.