The volatility of the cryptocurrency market has not only made it a cautionary tale for investors and businesses, it is still yet to make a mainstream impact when it comes to facilitating payments.
While Bitcoin was initially created in 2008 to become a pure peer-to-peer transaction currency, its potential as an investment instrument majorly contributed to its global appeal, thus dwindling its prospects of becoming a digital currency used for payments.
So when Markus Franke, CEO of digital asset platform Mento, declared to the MWC audience that “crypto is useless”, his sentiment was more rhetorical than definitive.
That’s because “stablecoins have exploded in usage” said Franke, who outlined a series of use cases that highlighted stablecoins’ surge in growth; from financial inclusion opportunities in Africa to developments in micropayments and microlending.
Stablecoins breaking financial inclusion barriers
Because stablecoins are tethered to a fiat currency, USD, GBP, EURO, etc., they maintain their stability in accordance with the performance of their fiat counterpart.
This has enabled Tether’s USDT and Circle’s USDC to gain a lionshare of the global stablecoin market, whilst new players, such as PayPal with PYUSD and Ripple Labs with RLUSD, are indicative of the market’s interest levels growing and expanding into traditional finance.
Backed by blockchain technology, stablecoins are accessible to everyone who owns a mobile phone or any other form of digital device. This is a crucial aspect to help underbanked customers access alternative payment methods.
“Outside the blockchain world, payment systems are built like a world garden, they are not interoperable and they are not working across borders very well,” said Franke.
He used Ghana as a use case. One-third of the African country’s population has access to a bank account, however, 95% own a mobile phone, giving them access to mobile banking, payments and access to the blockchain.
This availability enables Ghanaians equal opportunity to make payments via stablecoins, which send and settle transactions much faster, both domestically and internationally. Stablecoin use cases for cross-border settlement are also currently being developed by the likes of Mastercard and Visa.
Micropayments and microloans
Blockchain is also proving to be a cost-effective method for sending and receiving transactions. With remittances much lower than that of traditional methods, as well as the absence of interchange fees too, stablecoins can settle within seconds and are the tenth of an attached fee you would usually see with Mastercard or Visa transactions.
Micropayments, also referred to as nanopayments, received enhanced backing out of the blockchain ecosystem. Not only are they much faster to send and receive, but their accessibility to underbanked populations is critical.
The inclusion of introducing more stablecoins backed by more local currencies, such as the Philippine Peso, which Franke stated would be rolled out by Mento soon, is expanding adoption across countries that are primed for more financial inclusion opportunities.
However, micropayments are not the only blockchain-facing financial capability that is growing in interest and adoption.
Franke highlighted the introduction of microlending and the use cases where it is penetrating markets that again, are underbanked and looking to receive these capabilities without the support of the banks’ help.
“In many regions, for example Kenya, people in rural areas are not having any access to loans, outside of loan sharks,” said Franke.
“You can use the blockchain to gain access to a loan, you can use a local stablecoin to gain a loan in a local currency.”
But what about the hardware to enable these transactions and loans? While Web3 companies have continually released digital wallets that support crypto and stablecoin payments, Franke pointed to Opera’s MiniPay wallet.
He revealed that it is “by far the fastest-growing wallet in the Web3 world”, active in more than 60 countries and is available for iOS and Android, allowing to make fast and cheap transactions with a user onboard experience that takes one to two minutes.
In a world of traditional finance where access and preferences are more demanded than ever before in Western countries, we often take the privilege of this access for granted.
It comes as no surprise that in underbanked populations like Kenya or the Philippines crypto and stablecoin adoption is booming, but this isn’t just the case for these populations, as countries such as Brazil, Argentina, Australia, India and more are seeing their cryptocurrency market value soar due to increased adoption.
Is crypto useless? Maybe for those who have all the access in the world to traditional finance. However, to those who don’t, it’s proving to be vital.
