More than 90% of stablecoin transactions are not from real users, a recent study by Visa and Allium Labs has revealed. Despite optimism from industry leaders and overall positive market sentiment, the findings raise questions about the potential of stablecoins to revolutionize the payments space.
Stablecoin potential in payments
Of the $2.65 trillion in total stablecoin transactions over the past 30 days, only $265 billion is attributed to “organic payment activity,” highlighting the prevalence of non-user transactions. This data was highlighted in a dashboard aimed at analyzing stablecoin transactions to differentiate between genuine user activity and artificial volume.
The revelation challenges the narrative that stablecoins, pegged to assets like the dollar, are on the verge of changing the payments industry, an idea backed by fintech giants such as PayPal and Stripe. Despite the bullish sentiments expressed by industry leaders, including Stripe’s John Collison, the data underscores the early stages of stablecoins as a viable payment instrument, Bloomberg reported.
While the potential for stablecoins to disrupt the payments sector is acknowledged, practical hurdles remain. Pranav Sood of AirWallex highlights the imperative to leverage existing payment infrastructure to facilitate seamless adoption. Furthermore, user-friendly interfaces are important, with many consumers still favoring traditional payment methods due to ease of use.
Despite the challenges, analysts predict significant growth in stablecoin circulation in the coming years, with the total value likely to reach $2.8 trillion by 2028. Recently, Stripe made a comeback in the cryptocurrency space after exiting the space six years ago. However, this time, the payment firm is accepting stablecoins to ease transactions and reduce risk.
Institutional Stablecoin Adoption
Stripe’s decision to use stablecoins is a departure from its previous forays into crypto, which were plagued by volatility and technical challenges. Stablecoins like Circle’s USDC offer predictable value, mitigating the extreme volatility associated with traditional cryptocurrencies like Bitcoin.
During a recent presentation, Stripe co-founder and president, John Collison, demonstrated seamless crypto payments using USDC, emphasizing its stability and suitability for online transactions.
Reflecting on his previous experience with Bitcoin payments, Collison acknowledged the shortcomings and labeled it a “pretty terrible payment experience”. However, this time, Stripe is betting on stablecoins to provide a more reliable and user-friendly payment solution.
Stripe’s resurgence in the crypto space comes at a time when the company is experiencing exponential growth in payment volumes, surpassing $1 trillion. With clients including industry giants such as Zara and Ford, Stripe continues to strengthen its position in payment processing.
This article was written by Jared Kirui at www.financemagnates.com.