Stablecoins have become very popular in recent years. Unlike traditional cryptocurrencies where the prices have been extremely volatile, stablecoins solve the volatility problem and can actually be used as a real currency for day-to-day use. With stablecoins, the valuations are pegged to fiat currencies, mostly to the US Dollar (USD).
The most popular stablecoin, Tether (USDT), was launched in 2014, and it quickly became the crypto traders’ favourite hedge against crypto price volatility. Whenever these crypto traders want to quickly close profit in their BTC or altcoins’ gains, they would just sell the crypto to USDT, and wait for a new opportunity to jump back into BTC or their chosen altcoins.
In recent years, some newly launched stablecoins have been trying to challenge USDT’s dominance in the crypto trading sphere. TUSD, USDC, PAX, GUSD all try to overthrow Tether. However, none of them can come close to the success of USDT. Tether has successfully dominated the crypto industry.
But, here’s the problem. Even though USDT’s vision was to be used as a day-to-day payment, apparently, most crypto traders were only interested in utilizing USDT as a hedge against BTC and altcoin prices.
And while it’s great to have a wider range of selection for stablecoins such as PAX or TUSD, most of these other stablecoins are also only used for trading purposes. The potential of a new stablecoin to be used for day-to-day spending is still very huge.
It’s important to note that all of these established stablecoins that I have mentioned above are using Ethereum or Omni, with each blockchain confirmation time can take a few minutes or even more time when their networks become clogged.
Actual Stablecoins For Micropayments
The real potential for stablecoins is to be used for micropayments. The actual stablecoins that can realistically fulfill this role are the ones that are established on top of fast blockchain systems. One of the leading and fast blockchain ecosystems is called Stellar, where each confirmation time only takes a few seconds, and each transaction fee only costs a fraction of a cent.
It’s widely believed that a stablecoin built on top of Stellar can easily become the alternative to the digital cash payment ecosystem considering how fast Stellar is and how extremely cheap the transaction fee for each transfer is.
And then, there’s MegaFan. MegaFan is a security token project where they represent the shares of MegaFanstore Marketing Ltd. MegaFan will use EU regulated stablecoin EURT on Stellar blockchain, and the idea is to use this new stablecoin for micropayments that can also be used with a simple deposit via PayPal.
The plan here is that this stablecoin would enable microtransactions with almost zero transaction fees. The fact that MegaFan adds a Paypal deposit for the stablecoin makes it a more adaptable idea. It’s claimed that the fan wallet on MegaFan network can also be used for the 3D world that is developed by MegaFanstore and 3D FanGaming app. The Fan wallet also could be used for Votings and Surveys for Sports Clubs. Sports is just the start for the technology which will be also offered from the developing partners afterwards to all kinds of industries. Especially the media industry could use it to offer paid digital content for single demand.
MegaFan is not the only project that tries to take advantage of a fast blockchain network to issue stablecoin. There are also EOSDT on EOS blockchain, SDUSD on NEO blockchain, BUSD on Binance Chain, and others that try to fill the gap between stablecoin and micropayments. It’s also possible that Ethereum-based stablecoins will become much faster and have significantly lower transaction fees once Ethereum 2.0 is live.
The Bigger Picture
Stablecoins’ bigger picture is not just to be used as a trading and hedge tool against BTC and altcoins. It’s just one of many possible use cases. Micropayment, remittance, DeFi (decentralized finance), payroll, and smart contract escrow are all possible with the utilization of stablecoins.
The world is changing. Cryptocurrencies enable people from all over the world to transact with each other and stablecoins protect you from traditional crypto price volatility. Imagine the possibility of using stablecoins for various finance and payment purposes with much lower fees than the banking system. That alone can transform and reshape our digital economy.
While most popular stablecoins are only used as trading tools by crypto traders, the underlying use cases need to be “unlocked” before people can actually see the true potential of stablecoins. In my opinion, in order to achieve this vision, we have to encourage and promote stablecoins that are issued on fast and cheap blockchain networks, such as the ones that are launched on Stellar or TRX or NEO.
Perhaps, once these newly launched stablecoins become popular, and people actually use them to pay for some services or to buy real items, the stereotypes on stablecoins would slowly change. I cannot wait to see the world where stablecoins being used as standard forms of payment everywhere.