Payment Use Cases Drive the Accelerating Growth of Stablecoins

The current supply of global stablecoins exceeds $150 billion, showcasing the growing interest in digital assets that offer a relatively stable value.

The market for stablecoins has become increasingly competitive. As an illustration, Ripple, the issuer of XRP, recently made public its intentions to introduce a stablecoin backed by the United States dollar. 

Ripple’s stablecoin is poised to enter the market and challenge the leading stablecoin issuers, Tether (USDT) and Circle (USDC). Over the past month, the supply of Tether’s USDT and Circle’s USDC has increased by almost $10 billion.

Does the Current Bullish Market Have an Impact on the Increasing Demand for Stablecoins?

Curiously, the surge in popularity of stablecoins aligns perfectly with the ongoing cryptocurrency boom.

However, although the rise of stablecoins may be linked to the upward trend in cryptocurrency prices, experts in the field suggest that other factors drive the surge in demand for digital assets tied to the U.S. dollar.

Austin Campbell, an Adjunct Professor at Columbia Business School, mentioned that stablecoins are connected to the overall cryptocurrency market value, but this relationship has been decreasing gradually.

He mentioned that stablecoins backed by the dollar cater to a broader range of customers than digital assets, which are primarily used for speculative purposes.

Increasing Adoption of Stablecoins for Payment Transactions

Furthermore, their usefulness is on the rise, with a variety of practical applications for stablecoin payments becoming a reality.

As per David Uhryniak, the Head of TRON Ecosystem Development, Grab, an app often referred to as the “Uber of Singapore,” has recently started accepting USDT on TRON as a form of payment.

“TRC20-USDT holders now have the convenience of paying for their rides or food delivery without the need to convert to traditional currency,” stated Uhryniak. I anticipate a rising pattern in which an increasing number of global online marketplaces will incorporate TRON to facilitate cryptocurrency transactions for regular services.

Uhryniak states that the TRON blockchain has emerged as a favored transport layer for popular stablecoins such as USDT, thanks to its affordable transaction fees and rapid processing.

Jelena Djuric, the CEO, and Co-Founder of Noble, a digital asset issuance chain, mentioned that stablecoins had found utility not only in decentralized finance (DeFi) but also in payments. According to Djuric, there has been a notable increase in the usage of stablecoins specifically for facilitating transactions.

“We can observe an instance of this phenomenon with Cypher Wallet, where individuals can transfer USDC from Noble and utilize those funds for purchases at any establishment that accepts Mastercard,” Djuric explained.

Djuric also mentioned that she thinks the most captivating applications of stablecoins are currently centered around digital dollars.

“Stablecoins offer greater convenience, efficiency, and scalability compared to traditional financial systems,” she stated.

According to Massimiliano Silenzi, the CEO of research firm Cryptorefills Labs, a recent study conducted by Cryptorefills reveals that a significant majority of crypto-shoppers, nearly 80 percent, have a preference for using stablecoins as their payment method for purchasing goods and services, as opposed to other cryptocurrencies.

It is worth mentioning that Silenzi highlighted the fact that, because of transaction speeds and fees, only a tiny fraction (one-sixth) of stablecoin payments occur on the Ethereum mainnet.

Obstacles Could Impede the Widespread Use of Stablecoins

Although the use of stablecoins for real-world payments is gaining traction, the progress may be hindered by regulatory and other related issues.

As an example, although there is a possibility of stablecoin legislation being approved in the U.S. this year, Senator Elizabeth Warren has recently expressed her disapproval of the proposed stablecoin bill.

Warren asserts that establishing fresh regulatory structures for stablecoins may “amplify and solidify” the risks they present to the American banking industry.

“Noble is working diligently to address these various obstacles, but it is important to note that progress takes time.” She expressed her belief that in the future, wallet interfaces will become more user-friendly while maintaining a high level of security through the use of chain and asset abstraction.

Undoubtedly, these obstacles could result in a decline in the popularity of stablecoins.

For example, Paxos recently released a report on PayPal USD, revealing that the amount of PYUSD in circulation during March reached a staggering $188.5 million. This signifies a significant drop of 39% in PayPal’s stablecoin compared to the previous month.

Strategies for Promoting the Expansion of Stablecoins in the Future

Despite the obstacles, Campbell is confident that stablecoins will thrive as the cryptocurrency industry evolves.”Stablecoins are likely to surpass DeFi and evolve into a global payment solution,” he stated.

Despite the gradual pace of adoption, the future growth of stablecoins is guaranteed by the increasing emphasis on education and the rising retail demand.

Significantly, Tether is already making efforts to enhance stablecoin education.

In a recent development, Tether has forged a collaboration with Coins.ph, a renowned digital asset exchange in the Philippines. The primary objective of this partnership is to raise awareness and enhance knowledge about blockchain technology, Bitcoin, and stablecoins in the local area.

As per a blog post by Tether, the educational initiatives being introduced will focus on various sections of the Filipino population. This encompasses individuals in the finance industry, such as bankers and fintech firms, as well as overseas Filipino workers who are in search of effective remittance options.