Stablecoins go back to 2014, when Dan Larimer and Charles Hoskinson created BitUSD in the blockchain of BitShares, which was the first attempt to create a stable digital currency in history. Revolutionary in the sense that this was meant to peg against the dollar on the basis of an algorithmic means which would be underpinned by crypto collateral.
Nonetheless, BitUSD encountered various technological difficulties as well as failed to manage its liquidity adequately to a sufficient extent, thus, at some point not being able to sustain its peg reliably. This early abuse demonstrated the extent of the challenges that conducting an effectively viable digital currency included, however, this did not put off visionaries.
However, the crypto market has turned out to be as significant as the stablecoin market. Such blockchain-based iterations of national currencies have increased in circulation since the beginning of 2020, when they were worth about $4 billion, to almost $200 billion. In the November 2024 alone, a digital dollar usable digital currency has settled 1 trillion in transactions in the USDC- the digital dollar released by Circle. The Tether corporation (USDT) is officially more profitable than most banks turning $7bn profit in 9 months only.
In this paper, you will learn why the adoption of stablecoins is the game changer in your business.
More reach to international markets
A large section of the world has yet to even begin to have the benefit of any form of banking structure altogether. This may be a major obstacle to companies attempting to tap new customers or suppliers in the underbanked areas.
Using stablecoins such walls may fall down. The incumbent payment players are on the back foot: the random PYUSD launch at PayPal and desperate $1bn buy of an obscure stablecoin company at Stripe. That gives the global markets to the individuals who have difficulties with the more traditional ways of accessing banking.
Stablecoin transactions were at 8.5 trillion in 2024 and over twice the amount of Visa at 3.5 trillion. According to analysts, the growth of stablecoins to 400 billion AUM by 2025 is expected because of the U.S. regulations, fintech bank integrations. The venture capitalist Chamath Palihapitiya argued that the stablecoins might grow fourfold or fivefold by the end of 2025.
Whereas stability-based cryptocurrencies are opening the doors to unexplored markets, they also allow companies access to innovative investments. Even futuristic organizations present special offers, loyalty deals, or online coupons in form of stablecoins which can be redeemed relatively quicker with a unique open border incentive to gain international business.
The technology under stablecoins blockchain can provide more security than what the financial system is able to do. Every transaction is also registered in a decentralized ledger that can hardly be recreated or forged. Moreover, more often, payments with stablecoins are more transparent and trace potential fraud more effectively.
In addition to transparency, stable coins encourage payment compliance by adding measures like Know Your Customer and Know Your Business procedures. They do the verification of the businesses and their partners, thus minimizing the possibility of indulging in some form of illegitimate act. With transparency and compliance drastically enhanced, stablecoins will at last allow businesses to operate with confidence within the existing highly burdensome world of regulation.
Reduced Cost of Transaction
The traditional channels of payment either locally or abroad is very expensive. There are banks and other financial institutions through which these transactions are carried out and they charge a fee when processing such payments. Current payment networks are already taking a cut of 2 to 3 percent in charge of the swipe and are eroding business as well as consumer profits. In the case of cross-border it is more of the trend.
The newest breed of blockchain, seen in Solana and Base, allows one to transport financial value to anyplace throughout the globe to nearly any business or person-based receiver in less than a second, at practically no expense. This is compared to the cost-causing and inefficiency of the $150 trillion of the annual cross-border payments based on the traditional rails where the intermediaries derive an amount of around $2.5 trillion revenue out of such cross-border flows that serve as a tax on the international trade.
In particular, stablecoins are already the prevailing global settlement platform and this fact has not gone unnoticed even by Chris Waller who is a Federal Reserve Governor. He adds, “Stablecoin market capitalization is pegged to the U.S dollar at around 99 percent.” In this case, stablecoins can help to support the position of the dollar in the world economy and give more economical power to businesses in the case when they are engaged in international trade (Carter, 2024).
Conclusion
The competitiveness, cost reduction and new growth opportunity will be determined by the businesses taking stable coins into action as usage of stable coins expands. By November 1 st 2024, Tether had a balance of bonds exceeding those of Germany, Australia and UAE. More than 70 percent of market capitalization of stablecoins was held by Tether with a value of over 120 billion dollars. Imagine that you have a business and need to make it relevant and effective in the digital economy that rapidly changes. In that situation, it is one of the steps you will have to take when investigating the use of stablecoins.
