Comparing Stablecoin against Traditional Payments, and Remittance Costs
As time passes and the cryptocurrency-blockchain space develops, the most popular coins still have yet to find stability in their value – which is great fun for traders, but poses a consistent roadblock for users who need a more reliable and steady currency for their use cases. Enter stablecoins.
What are stablecoins?
Stablecoins function similarly to other types of cryptocurrency in their use, but whereas projects like Bitcoin and Ethereum have their value determined by the whims of the market, stablecoins have a fixed value which is based on another asset, most commonly a fiat currency such as the US dollar, though precious metals are being introduced as another alternative.
Put simply, this means stablecoins bring all the benefits of blockchain-powered cryptocurrency – decentralization, security and transparency – without the unpredictable price swings that prevent many potential users from adopting blockchain-based solutions for their payment and transactional needs.
What are traditional payments?
Traditional systems for making payments include direct bank transfers as well as various third party money transfer operators. Until recent years, there were few to no alternatives to moving money domestically and internationally – which led to prohibitively high fees despite a transfer process that often took a number of working days to finalize.
These traditional payment systems are also only supported in certain countries, and the less developed a country is, the fewer options available in terms of payments. Know-your-customer verification and lack of infrastructure also preclude huge numbers of people from accessing traditional payment solutions.
What is remittance?
A remittance, on the simplest level, is a transfer of money. In practice, remittances very often involve overseas transfers of money in varying amounts with some degree of frequency. Workers who live abroad from their families are a classic example of remittances – and these are the exact cross-section of people who are poorly serviced by traditional payment systems. To get an idea of the scope of remittances, The Economic Times reported that in 2018, India’s overseas population transmitted US$80 billion from abroad back to India. Bearing this information in mind, blockchain-based stablecoins are an ideal solution for remittances.
What are the costs of remittance?
Traditional remittance avenues cost a pretty penny – not only in their explicitly stated fees, but also in their currency conversion rates which cause more money to be lost by remitters. To give a more explicit illustration, we tested the cost and speed of transferring US$500 to Indian rupees:
As you can see, even “fee-less” traditional remittance options are slow and costly in comparison.
Why are stablecoins beneficial?
Put simply, blockchain-based stablecoin remittance is cheaper, faster, more secure and more private than traditional remittance. The fees are infinitesimal and there’s no need to trust a third party, which can make the user vulnerable to scams and embezzling. While most cryptocurrencies would brag about the same advantages, only stablecoins can guarantee that a transfer will be equal in fiat value when it’s sent and delivered. The transparency also promises that both remitter and remittee on either side can be fully aware of the status and progress of each remittance transaction.
As far as stablecoins go, Stably is a company leading the way with a variety of stablecoin options.
How does Stably help with stablecoins?
Stably is already known for Stably USD (USDS), a stablecoin pegged to the US dollar which has been live and in use since 2018. As far as Stably is concerned, though, the stablecoin possibilities are only beginning with the USD. In 2020, Stably plans to launch more stablecoin alternatives backed against other fiat currencies such as GBP, EUR, JPY and more. Even further, Stably is developing stablecoins to be backed by precious metals like gold and silver – opening the potential for stability that transcends even fiat currency backing.
One pitfall of decentralized remittance options is that they don’t always provide the framework for the user to easily partake in the system – and cryptocurrency can initially seem quite impenetrable to the average user who isn’t tech-savvy. Stably Prime solves this by introducing a borderless account explicitly designed for remittances through stablecoin technology. Using Stably Prime, users can hold, send and receive fiat, crypto and stablecoins 24/7, with no account minimum or monthly fees involved. Stably Prime is available to any identity-verified client in more than 150 countries, and it is the ambition of Stably to transform the way remittance works through further development of the platform through introduction of a mobile app, in addition to consistently increasing the number of stablecoin options available to users.
So while the world of finance and remittance is in the midst of upheaval and change – the mission of Stably is to bring stability and security to its users.
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