Among the many trends in the ever-changing world of business is the growing use of stable coins. Once an anomaly outside of the very specific blockchain sector, stable coins are seeing more use across different industries. In fact, interest in stable coins has grown so much that some experts predict that it will match that of Fiat currency in a few decades.
But what are stable coins? And why are they being used within business? In this article, we’ll touch on the phenomenon and what it means for business owners and their customers.
What Are Stable Coins?
Stable coins are a subcategory of cryptocurrency, which are currencies based on distributed Ledger technology. Unlike fiat currency like the US dollar or the Great British pound, cryptocurrency is typically issued by private projects, with its value based on the forces of demand and supply, all linked to a blockchain network. Stable coins are a unique form of cryptocurrency in that their value is tied to that of a mainstream asset or currency.
For example, the biggest stable coin in the world is Tether, which is linked to the value of the US dollar 1:1. Stable coins are considered a less volatile type of cryptocurrency as they are less prone to dramatic price swings. Outside of this, stable coins are used the same way any other cryptocurrencies are used. They cannot be physically held but are transferred from one digital wallet to another.
Stable coins can be used to pay for goods and services, and these days, have seen an uptick in businesses accepting all types of stablecoins. Businesses are also working to capture the crypto spending crowd using SEO, backlinks, and other such tools (source: https://goldenmetrics.com/ ).
But why are stable coins so high in demand, and should consumers and business owners alike embrace them?
The Benefits Of Stable Coins
Stable coins remain popular in the business world thanks to the following benefits:
-
Price Stability
This is perhaps the biggest selling point of stable coins that endears it to crypto users and businesses alike. Stable coins do not see significant fluctuations in their value and, thus, are more easily spent and received. If a business owner were to sell a pair of shoes and denominate the value in Bitcoin, for example, a market dip could mean that the tokens they receive for the shoes could increase or decrease in value. While some day investors are happy to deal with these price swings in the hope of making a profit, a business looking to stay liquid and functioning needs price stability. This is where stable coins come in, as the same pair of shoes sold for USDT will offer tokens to the merchants that will retain their value in the short and long term after the payments are processed.
-
Fast Transactions
Stable coins might be exceptionally secure in terms of their value, but they are still cryptos. This means that transactions completed using them can be done very quickly. It is not unusual for transactions done with fiat currency, especially cross-border, to take minutes or even hours to complete. After all, this is one of the biggest criticisms of the mainstream financial sector. But using stable coins means that merchants can receive their money nearly instantaneously compared to fiat currency. In the case of many stable coins, these transfers can be done at a very low price, as cryptocurrencies often cost less to send than fiat currency, even for large amounts.
-
Privacy
More people these days are cautious about their privacy, and using cryptocurrency is a great way to preserve it. Unlike fiat currency, the creation of a crypto wallet can be done fully anonymously. In this case, even the wallets’ creators cannot fully monitor the user’s activities, and this means that cryptos can be spent with ease. Also, businesses benefit from accepting stable coins as they tap into this market of privacy-centric consumers who use digital assets. As greater emphasis on privacy only continues to grow online and offline, the need for privacy-preserving money will be greater than ever before.
-
Access to the World of Crypto
Regardless of how you feel about it, it is clear that cryptocurrency is going to be one of the dominant technological advances of the 21st century. From the approval of spot ETFs for tokens like Bitcoin and ether to the growing support for the industry by world governments to the increasing financial value of major tokens, cryptocurrency seems here to stay. As time goes on, businesses that do not embrace cryptocurrency risk being shot out of their markets by more forward-thinking competitors. Thus, by accepting stable coins, businesses can tap into this market while still enjoying some level of price stability.
Conclusion
Stable coins have carved out a unique space for themselves within the crypto market by offering all the benefits of digital assets while still leaning into the price stability of fiat currency and other such assets. With all of these, it is no surprise that so many businesses are incorporating stable coins into their operations, from accepting them for goods and services to spending them on their own expenses. The stable coin market will only grow to meet increased consumer appetites, and as this happens, businesses both within and outside of the digital market space will reap the benefits.
