As a local North Florida news reporter, Jane Sheppard has a deep understanding of the perspective of her audience. With this in mind, let’s dive into some intriguing news involving the world of cryptocurrency, specifically stablecoins.
Visa’s Surprising Stablecoin Findings
Most of us have heard of cryptocurrencies, but did you know that there’s a new breed of crypto tokens called stablecoins? These digital currencies are tied to an asset like the dollar and are designed to minimize volatility. But a recent study co-developed by Visa Inc. has shed light on the fact that a majority of stablecoin transactions may not be originating from genuine users.
Visa and Allium Labs have developed a metric designed to sift out transactions initiated by bots and large-scale traders, isolating those made by real people. Turns out, out of about $2.2 trillion in total transactions recorded in April, only $149 billion came from what’s being called “organic payments activity”.
Stablecoins’ Potential Impact on the Payments Industry
These findings challenge the optimism of stablecoin proponents who argue that these tokens have the potential to revolutionize the massive $150 trillion payments industry. Big names in fintech, including PayPal Inc. and Stripe Inc., are making progress with stablecoins. In fact, Stripe‘s co-founder, John Collison, cited “technical improvements” as the reason for his bullish stance on these tokens.
But as Pranav Sood, executive general manager for EMEA at payments platform Airwallex, pointed out, stablecoins are still in their infancy as a payment instrument. He believes that while they do hold long-term potential, the immediate focus should be on improving existing payment methods.
The Challenge of Tracking Crypto Activity
- Determining the “real” value of crypto activity using blockchain data is notoriously difficult.
- Glassnode, a data provider, estimated that the record $3 trillion total market circulation assigned to digital tokens at the peak of the 2021 bull market was actually closer to $875 billion.
- With stablecoins, transactions can often be double-counted depending on the platform to which users are transferring funds.
Stablecoins: A Threat or an Opportunity?
As a major player in the payments industry, Visa itself could potentially be impacted if stablecoins become a widely accepted means of payment. Analysts at Bernstein predicted last year that the total value of all stablecoins in circulation could reach $2.8 trillion by 2028. That would be an almost 18-fold increase from their current combined circulation.
Despite this, Airwallex has noticed a lukewarm demand from its customers for stablecoin-based payment solutions. Many still don’t regard the technology as user-friendly enough.
In conclusion, while stablecoins hold potential, they have yet to become a widely accepted means of payment. As always, time will tell how this emerging technology will ultimately shape the future of the payments industry.
