Stablecoins and the Future of the Gaming Industry

What are stablecoins?

What are stablecoins?

Stablecoins are cryptocurrencies whose value and stability are tied to a reserve asset. Reserve assets can be fiat currencies, such as the U.S. dollar, euro, renminbi, or commodities, such as gold. Stablecoins have the advantages of instant processing, security, and privacy of cryptocurrencies, but without the volatility associated with cryptocurrencies.

Stablecoins have been receiving a lot of attention over the past three years. In 2014, Tether Corporation of the United States issued the first stable currency Tether (USDT, the Chinese name is TEDA), with a current market value of 20.5 billion US dollars. It is the first widely adopted stable currency and is currently the largest stable currency. Tether is pegged to the U.S. dollar 1:1, that is to say, every time Tether issues a Tether, it must add a reserve of one dollar to its account. This mechanism is called a reserve proof mechanism. The encrypted digital currency issued for collateral is called a legal asset-backed stable currency, which plays a role in fund hedging, transaction intermediary, payment settlement and other functions in the digital currency market with violent price fluctuations.

After Tether, other stablecoins have been issued one after another. At present, there are more than 20 stablecoins on the market, such as the centralized stablecoin USDC (currently used by Coinbase), TrueUSD and PAX, etc., as well as decentralized or algorithm-based stablecoins such as DAI and USDN. Centralized stablecoins are backed by fiat currency or commodity reserves within a central bank or vault, while decentralized stablecoins acquire and maintain value through an algorithmic network.

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Stablecoins and Gaming

The U.S. Treasury Department has specifically highlighted the “retail” use of the stablecoin, which is expected to be widely used in e-commerce, social applications, as well as gaming and e-sports. Affected by the epidemic, the game industry has further developed, and more and more consumers enjoy home entertainment. The gaming industry is expected to attract 3 billion gamers by 2023, and consumer spending on games is expected to grow to $196 billion by 2022.

Gaming has always been the largest area of ​​cryptocurrency application, and the earliest encrypted applications were developed to facilitate the payment of digital goods in games. Non-fungible token projects such as WAX, CryptoKitties, and Decentraland popularized the concept of digital goods that can be traded and purchased.

In early December, Microsoft and EY announced plans to use a blockchain-based platform to enable Microsoft XBOX game partners, artists and content creators to track and manage payments and royalty contracts. A related press release states that “the scaled solution reduces processing time by 99% and calculates royalties in near 100% real-time by using digital contracts.” Dapper Labs, creators of CryptoKitties, one of the earliest blockchain games, plans to integrate USDC into Dapper Labs' new Flow network. This is the first decentralized application, the collectibles trading market adds credit card and debit card payment options, and supports USDC global settlement. Circle also announced a partnership with Visa, with plans to make the stablecoin accessible to businesses around the world. "Stablecoins like USDC represent promising innovative payments and provide an emerging platform for fintechs and digital wallets to enable new payment processes," said Cuy Sheffield, head of cryptocurrency at Visa.

Zytara is one of the emerging fintech companies looking to use stablecoins for in-game payments despite a new partnership with Prime Trust. Zytara will launch its own branded stablecoin, ZUSD, to serve various use cases in the burgeoning gaming and esports industries, while creating its own banking platform and payment network for millennial and Gen Z gamers. Prime Trust will act as the issuer of ZUSD and hold USD reserves pegged 1:1 to ZUSD. Additionally, Prime Trust offers a similar infrastructure to TrueUSD and a handful of other stablecoins.

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This article is from NFT Labs (ID: nftlabs), if you need to reprint and exchange, please contact Sophia (ID: lovebit98)