In recent weeks we have written many articles regarding stablecoins. From the French Central Bank’s call for applicants to help with its digital Euro experiment to Tron’s launch of its own stablecoin program, Djed. However, these reports along with new data from CoinMarketCap.com indicate that a much bigger shift towards stablecoins is taking place.
According to them, there has been a 40% increase in the use of the 4 largest reserve backed stablecoins Tether’s USDT (on Ethereum, Tron and Omni), Centre’s USDC, Binance’s BUSD, and Paxos’s PAX in the last 8 weeks. This increase means that the value of exchanged Ethereum based stablecoins now exceeds the total value of all Bitcoin transactions.
But what is behind this growth and who are using these stablecoins? According to Jeremy Allaire, CEO of peer-to-peer stablecoin payment company Circle “SMEs are seeking both the safety and utility of digital dollars”. Circle has seen a 700% rise in new signups in recent weeks increase with the kinds of companies signing up including “e-commerce marketplaces, advertising networks, luxury goods producers, recruiting platforms, digital content markets, and peer-to-peer lending platforms” Allaire added.
All this means that new users are also coming from outside the cryptosphere. They are normal businesses seeking security in a difficult time. The big question though is how much of this demand is temporary due to the current crisis, and how much are the seeds of a bigger monetary shift.
The iGaming business has already seen a major shift towards cryptocurrencies and stablecoins, with many not just accepting cryptocurrencies, but also developing their own in-game/in-casino backed stablecoins. iGaming businesses can, therefore, be seen as trendsetters and possible models to follow in wider adoption by other businesses.
We also wrote recently how Facebook changed tack with its Libra cryptocurrency project, shifting to fiat currency backed stablecoins. With many senior politicians now asking the US government to work towards a digital Dollar and China working vehemently on its own blockchain ecosystem, it appears to be a trend that is here to stay. Especially as we undoubtedly head into a longer more turbulent economic period.