Introduction
VISA the payment processing giant is really interested in getting financial products across to everyone no matter where they live. Recently, the platform conducted a research to analyze the vital role that stablecoins are playing not just in the crypto industry but particularly in developing economies where financial inclusion is difficult and not many could access finance products.
Interesting figures captured in the report includes the market supply of all stablecoins. It also covers how people in those economies make use of stable coins and which are their top choices. Other things that are covered in the report will be highlighted in sections of this presentation below. VISA choose emerging markets for this study because they know those are the places where more people are embracing crypto faster than elsewhere. Some of the markets included in the survey are Nigeria, Brazil and India. Now lets get into it proper.
What they use stablecoins for
It would be nice to understand how large the total stablecoin market is. The report stated that the total market supply of stablecoins exceeds $170,000,000,000. That number is really significant and emerging markets are really at the top driving this growth. First of all, the report sought to identify why more people in emerging markets use stablecoins. Against popular opinions that stablescoins are all about collaterals for crypto loans, the report discovered that these assets go beyond that.
A poll was conducted for an audience audience drawn from sample emerging markets and it discovered that the most popular use of stablecoins is for crypto trading. More than 50% of respondents replied that crypto trading is their top reason to hold stablecoins. This is really not so surprising when you look at how popular stablecoins are in crypto market trading pairs. It is often the biggest liquidity for any tokens listed. There will always be a stablecoin paired with tokens for users to trade. And when users want to sell back their tokens, they often exchange them for a stablecoin.
The second most popular reason to hold stablecoins in emerging markets is to save money. In a country like Nigeria, it is the main reason users their hold stablecoin. An overwhelming majority of respondents also picked this as their second reason. Well this might not really be surprising especially when one looks at how local currencies in those places loose value daily. Inflation and poor government economic policies have not helped local currencies to survive and thrive. And since the dollar fiat currency is not easily available through banks, users in these emerging economies find stablecoins both easy to access and a reliable store of value for their money.
The third reason that respondents gave for holding stablecoins is that they give them the best exchange rates when swapping to other currencies. This again is so true especially if you have changed money in such economies. The amount of money lost to exchange rates is astronomical. This is also true when emigrants working overseas send money home. By the time the exchange rates cut a huge chunk off the funds, the amount remitted does not reflect correctly what was sent.
The above is just the three top reasons that users in emerging markets gave for using stablecoins. There are many other reasons as you can see in the poll result below:
Blockchain and wallet for stables
Another thing the survey tried to find out is what blockchain networks are most popular for stablecoin transactions. Remember that the study still focused on emerging markets. When polled on this, the report discovered that most users prefer using stablecoins on the Ethereum network. This is really surprising given that when it comes to fees, the Ethereum network is certainly not the cheapest for stablecoin transactions. But then for whatever reasons, it was the top blockchain of choice.
Other blockchains came behind Ethereum in the poll. Binance Smart Chain came immediately after Ethereum as blockchain of choice. Perhaps the popularity of Binance as the largest exchange market has a role to play in this rating. But then, there could be other reasons. Other blockchains that users choose besides Ethereum and BSC are Polygon and Tron. Solana was also selected though not a popular choice.
Besides the blockchain network of choice, respondents were also asked about the crypto wallets they used most for their stablecoin management. It was not surprising to see Binance wallet taking the top spot here. Binance was one of the earliest to enter the P2P market of these markets. Thus it was easy for traders to convert their local currencies to crypto and vice versa. Although Binance P2P is not working in Nigeria right now due to issues with local authorities, it still continues to be a popular cryoto exchange platform there. Same applies to India, Brazil and other emerging markets.
Which emerging market use stablecoins the most?
Well, I personally was not surprised when the report mentioned that Nigeria is the top emerging market for stablecoin.
At the country level, Nigerians had the highest affinity for stablecoins in every category. They use them the most, they have the highest favorability, they have the highest portfolio concentrations in stables. India is the runner up. source
Nigeria is the most populous black race. With the economic situation in the country not so great, many youths have embraced and more still keeps on embracing crypto as an alternative way to earn some money either as crypto traders, airdrop hunters or through other opportunities.
Finally
Stablecoins have so much importance in the crypto sector. VISA was using the report to understand what else could be done to make sure that crypto and other technologies could be used to drive financial inclusion possible everywhere. There are more details to be learnt from the report. Why not take a look here.
Note: Thumbnail is mine
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