Can Businesses benefit from Stablecoins?
What are some advantages they have over FIAT currencies?
A stablecoin is a cryptocurrency that maintains its value relative to other currencies. The term “stablecoin” was coined by Ethereum co-founder Vitalik Buterin, who first used it in 2016.
The difference between cryptocurrencies and stablecoins is their method of issuance. Whereas cryptocurrencies have no central authority controlling them, stablecoins are issued by an entity with control over the supply of coins. This can be done through several different methods:
More on stablecoins here: https://www.bitpowr.com/blog/what-are-stablecoins.
Why Consider Stablecoins as a Business Entity?
Why should you consider Stablecoins in the first place? Today’s banking system is slow and expensive; the infrastructure was created around 100 years ago when technology was not as advanced as it is now. There’s a lot of room for improvement with that system. For example, cross-border transfers can take three to five business days to clear. There are no weekend transactions or real-time settlement, no rapid authorization, no auditable record, and transaction costs are frequently very costly. So the Blockchain which is the technology behind stablecoins is solving most of those issues.
Current Stablecoin use cases in Business
You can use Stablecoins to trade digital assets and serve as an onramp from fiat currency to digital assets recorded on blockchains.
Stablecoins are used to facilitate fast peer-to-peer and cross-border payments. They also hold the potential for new payment innovations, such as programmable money.
Institutional stablecoins facilitate transfers of funds within a firm and allow efficient movement of internal cash across subsidiaries to manage liquidity risk and regulatory requirements.
Stablecoins are the backbone of Decentralized Finance they are used for collateralized lending, derivatives, asset management, and other services.
Advantages of Stablecoins over Fiat
Stablecoins are not tied to any one country, economy, or currency and can be used globally. Stablecoins are also known as “Tethered” because they have an initial supply limit and use blockchain technology with decentralized ledgers where transactions are recorded on multiple computers around the world in real-time. This means that when you make a payment using your credit card at Walmart for instance, there’s no transaction fee because it’s done through your bank account directly instead of having a third party taking money out of your account like what happens with Bitcoin where miners collect fees for their services.
Once you have a stablecoin, you can use it to make payments faster. When using a normal cryptocurrency, transactions take some time to confirm and are often subject to high fees that can add up over time. With stablecoins, there’s no need for these delays or extra costs—you’ll be able to send money straight from your bank account or credit card without worrying about the exchange rate changing during processing or waiting on confirmation times (which can happen with some cryptocurrencies).
Lower transaction fees help your business save costs enabling you to invest more in growth or new technologies. This is especially true for small firms that lack access to capital and require stablecoin-based payments as an alternative solution.
Additionally, lower transaction fees will help you compete with competitors who don’t use stablecoins because they’re worried about their own liquidity problems. In addition, lower fees can help increase profits by lowering costs associated with processing transactions or paying out salaries/salaries where salaries are paid in fiat currency instead of dollars or euros etcetera
The way Forward
Whether it be through the adoption of stablecoins or one of the many other blockchain solutions, it is still a good time to start exploring this technology. They offer users several advantages over traditional digital currencies because they are designed with stability in mind and can be used as payment methods at any time by anyone who has them. Because stablecoins are so adaptable, it’s no wonder that they’re gaining traction among forward-thinking firms looking for alternatives to banks’ service offerings and high fees.
Bitpowr currently supports stablecoins (USDC, USDT, BUSD) across different blockchains - Ethereum, Polygon, BSC, Tron, Solana, and Stellar. If you are building a use case around stablecoins, we can help