The main user scenarios of stablecoins: payment or transaction?
Editor's Note: This article comes fromBlue Fox Notes (ID: lanhubiji)Editor's Note: This article comes from
Blue Fox Notes (ID: lanhubiji)
, Author: Celia Wan, Translation: NuoL, published by Odaily with authorization.
Foreword: Monolith recently issued a new Visa debit card in Europe, which allows users to directly shop with the stable currency Dai. If this can be popularized, stable currency payments will be one of the entrances for cryptocurrencies to go mainstream. This means that payments in daily life can be made without fiat currency, and are not affected by the large fluctuations of cryptocurrencies. At present, stablecoins are more used in transaction scenarios, but in the long run, it must be payment rather than transactions that can maximize the potential of stablecoins.
The possibility of buying a pizza with a stablecoin is the entry point for cryptocurrencies towards mainstream adoption. Some stablecoin issuers, such as Coinbase, Paxos, and Terra, are working hard in this direction and have achieved some early results.
Indeed, this effort represents a change taking place within the cryptocurrency market. Stablecoins grew out of trading cryptocurrencies as a way for traders to quickly get in and out of trading positions, and now they are starting to find their way into the world of e-commerce and merchant payments.
"If you think trading is one of the few early use cases for it, then using it as a payment medium is one of the follow-up use cases," said Juntin O'Brien, head of Coinbase Commerce.
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Buy Pizza with USDC? not so fast
Stablecoin payments facilitated by Coinbase Commerce and Paxos are in the early stages of implementation. Previously, Coinbase Commerce only accepted BTC, ETH, BCH and LTC, adding the USDC stablecoin only a month ago. This means merchants can now accept their customers’ stablecoins through Coinbase Commerce.
Meanwhile, Paxos recently struck partnerships with debit card issuers Spend.com and crypto.com, which allow users who hold PAX in a crypto wallet to use it for everyday purchases. Paxos CEO Charles Cascarilla also explained why the use of stablecoins will eliminate settlement risks for merchants under the current payment system.
In the traditional model, when a consumer pays with a credit card, the merchant does not receive the payment immediately. It usually takes several days for them to arrive in your account. However, Cascarilla said: "When a consumer pays with PAX, the merchant receives the money immediately, the money is already in the merchant's hands, and the merchant can use it to buy other things immediately. It's not some kind of IOU, it doesn't take a day or two to arrive. .”
In many ways, Terra is already ahead as a payment medium used by consumers. According to Terra CEO Daniel Shin: Unlike other stablecoin issuers, Terra’s goal is not to attract cryptocurrency enthusiasts. Shin also said that instead, the company uses the stablecoin primarily to process payments, which keeps costs down for merchants and provides customers with ongoing discounts.
The company proposes a 90% reduction in transaction fees to merchants. For example, on TMON, an e-commerce website in South Korea, if a user chooses to use a credit card as a payment method, TMON needs to pay an average fee of 2.1% for each transaction. Shin said that with Terra, that figure is cut in half, and the company hopes to continue reducing that fee.
The startup reported that it had processed more than 380,000 transactions within 40 days of supporting stablecoin transactions on two South Korean e-commerce sites.
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The path to mass adoption
Even so, cryptocurrencies still face obstacles. After all, exchanging fiat currency for stablecoins to pay for purchases is confusing for many people. So, for now, Paxos is focused on serving cryptocurrency holders so they can pay in stablecoins, not just trade.
