Stablecoins come into the picture at a time when the massive fluctuation of digital assets impedes their application. A recent report called ‘Stablecoins: The new bank account’ has revealed an optimistic time ahead for these stablecoins. The digital coins pegged with fiat or gold have contributed to the disruption of traditional payment space.
Satoshi Capital Research on its Twitter handle posted:
“[New Research] — Stablecoins: The New Bank Account
Stablecoins are digital tokens that represent national currencies and are issued using a variety of bitcoin-based technologies, representing an $18 trillion market opportunity.”
The research suggests that the total market opportunity for stablecoins exceeds $18 trillion while that of Bitcoin [BTC] stands at somewhere around 15 trillion. The colossal difference between stablecoin and conventional banking institutions is that it provides a payment processing channel that is time and cost efficient.
A significant edge that pegged currencies have over traditional banking accounts is that anyone can access and transfer funds in real time with no transactional fee involved.
The processing fee and time in terms of stablecoin is nil. On the other hand, the processing time for US domestic transfers takes around 24 hours at a fee of $20 per transaction and cross-border payment accounts for a processing time of 48 hours at a fee of $40 per transaction.
Tether [USDT] has been the stablecoin that has been around for the longest time, since its inception in 2014, and it continues to dwarf the newer stablecoins in the market. The research exhibited the numbers which backed Tether’s dominance over recent players [like TrueUSD, Paxos Standard Token, Gemini Token, among others] in the space.
The entire stablecoin space’s valuation despite the entry of new players in 2018 stood at more than $700 million while the traded volume totaled at more than $11.5 billion.
Tether [USDT] had an issued value of $2,036 million. The cumulative daily trading volume of the oldest stablecoin had been registered at $ 2,950 million and the trading volume for the year 2018 totaled at $1,080 billion.
The report also mentioned a whopping a $600 trillion transfer volume of stablecoins in 2018 via Domestic bank transfer, out of which Tether [USDT] scooped a significant $109 billion volume, a 624% increase in its share from its $15 billion volume the year before.
Stating that this breed of digital asset is efficient as a parallel currency mainly due to its digital nature, the report asserted:
“To people operating within parallel currency economies today, such as Venezuela, stablecoins offer meaningful competition to traditional bank accounts as there are no limitations on currency denominations or transfer amounts and frequency.”
Despite being a critical contender, stablecoins have a long way to go with respect to its offerings to compete with traditional banking establishments in a mainstream scenario.