Stablecoins originated back in 2014 when BitUSD was released on the blockchain of BitShares by Dan Larimer and Charles Hoskinson as the first-ever try at a stable digital currency. Revolutionary because this aimed at holding a peg 1:1 with the dollar through an algorithmic mechanism, which was to be backed by crypto collateral.
Still, BitUSD came up against a number of technical challenges and also struggled to handle liquidity well enough, eventually being unable to reliably maintain its peg. This early failure exposed the depth of the difficulties involved in establishing a truly stable digital currency, yet this did not discourage innovators.
Nevertheless, the stablecoin market has become as important as the crypto market. Since the start of 2020, these blockchain-native versions of fiat currencies have grown from $4 billion in circulation to nearly $200 billion. In November 2024 alone, USDC – a digital dollar issued by Circle – was used to settle $1 trillion in transactions. USDT (Tether corporation) made $7bn in profit in only 9 months, officially more profitable than most banks.
In this article, you will find out why using stablecoins can be a game-changer for your business.
Increased Accessibility to Global Markets
A big part of the world still lacks any sort of developed banking infrastructure at all. This can be a big barrier for businesses as they try to reach new customers or suppliers in underbanked regions.
With stablecoins, such walls can come tumbling down. Legacy payment companies are playing catch-up: PayPal’s random PYUSD stablecoin launch and Stripe’s frantic $1bn acquisition of a little-known stablecoin company. That opens worldwide markets to those who struggle with the more conventional methods of banking access.
In 2024, stablecoin transaction volumes reached $8.5 trillion, more than double Visa’s $3.5 trillion. Experts predict that stablecoins will double to $400 billion AUM in 2025 due to U.S. legislation, fintech & bank integrations. According to venture capitalist Chamath Palihapitiya, predictions suggest that stablecoins could quadruple or quintuple in adoption by the end of 2025.
Beyond opening doors to new markets, stablecoins also grant businesses access to innovative investment opportunities. Forward-thinking businesses are even offering special promotions, loyalty rewards, or digital coupons redeemable via stablecoins, providing faster, borderless incentives to attract global customers.
Stronger Security and Fraud Protection
The blockchain technology behind stablecoins allows for higher levels of security than financial systems can offer. Each transaction is recorded on a decentralized ledger that is very difficult to alter or counterfeit. Furthermore, transactions made with stablecoins are usually more transparent and traceable, further helping to reduce the possibility of fraud.
Besides transparency, stablecoins promote compliance by introducing features such as Know Your Customer and Know Your Business protocols. They ensure that businesses and their partners are verified, reducing the chances of engaging in any illicit activity. By greatly improving transparency and compliance, stablecoins can finally let businesses act with confidence in today’s complex regulatory environment.
Decreased Costs of Transaction
Conventionally, methods of payment domestically or internationally are extremely costly. In all these transactions, banks and other financial institutions charge for the processing of such payments. Traditional payment networks charge merchants 2–3% swipe fees, eating into profits for businesses and consumers alike. For cross-border, the tendency is greater.
The latest generation of blockchains, represented by Solana and Base, enables one to move financial value anywhere in the world to almost any business or individual recipient in under one second and for near-zero cost. This stands in sharp contrast to the embedded costs and friction in the $150 trillion of annual cross-border payments that use traditional rails, wherein intermediaries extract roughly $2.5 trillion in revenue from these flows, acting as a tax on global commerce.
Specifically, stablecoins are becoming the dominating global settlement infrastructure, and it has been recognized even by Chris Waller, who is a Federal Reserve Governor. He says, “About 99 percent of stablecoin market capitalization is linked to the U.S. dollar.” This means stablecoins are influential in bolstering the dollar’s status within the global financial system and providing businesses with more economic leverage whenever they are operating in international trade (Carter, 2024).
Conclusion
As stablecoin adoption increases, the businesses that take stablecoins into action will set their competitiveness, reduce costs, and realize new growth opportunities. As of November 1st 2024, Tether holded more bonds than Germany, Australia, and the UAE. Tether had over 70% of the stablecoins market capitalization, over $120 billion. Suppose you want to ensure your business remains relevant and efficient in the fast-changing digital economy. In that case, it is a step you can’t avoid taking when exploring the use of stablecoins.