The Role Of Stablecoin In Emerging Markets

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INTRODUCTION

Sometimes I forget that the cryptocurrency ecosystem is one that is very broad and large with a lot of different innovative features and technology, take for example now the concept of stable coins, these are a type of cryptocurrency which do not possess the volatile nature which cryptocurrencies are known for.

The name "stable coin" implies that this type of cryptocurrencies are stable, they attain this stability by pegging their values to that of fiat currencies or commodities by doing so, they are able to address the issue of volatility and adapt to the needs of many who have concerns of the volatility of cryptocurrencies.

In this post of mine I will be explaining and discussing some of the important and significant roles in which stable coins are playing in the cryptocurrency market.

• FACILITATES BETTER REMITTANCE SERVICES

Remittance simply involves sending money or funds to someone living in a different country from you, remittances have mostly been done in cases of emergency and basically for the purpose of providing aid to either one family member to the other or charity to financially unstable or undeveloped countries.

It is a shame though to see that funds or capitals meant to serve emergency purposes as a result of the traditional remittance system, take days even longer before it gets to those who need them and upon getting to them the remittance institutions have taken a sizable amount most times more than 10% of the total money sent to serve as transaction cost.

But, when you use cryptocurrencies basically stable coins for this kind of transactions it is not so, this is because stable coins which is a type of cryptocurrency, has all the features of cryptocurrencies, urrency except for volatility and as such it improves the processing speed, efficiency and reduces transaction costs.

• MITIGATES CRYPTOCURRENCY VOLATILITY

The main role, in fact the main purpose of creating stable coin was to address the issue of volatility in the cryptocurrency market or in the use of cryptocurrency, so now this way any businesses or market which wants to operate on cryptocurrency do not necessarily have to suffer from its volatile nature.

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Instead, they can just choose to use any stable coin of their choice, with this stable coin they can do anything they want while being rest assured that the value of the stable coin is fixed hence, it can serve as a safe haven from inflation of traditional assets and volatility of traditional cryptocurrency.

Additionally in certain countries where their Fiat currency is prone to inflation and constant devaluation, stable coin can help create a kind of confidence in businessman and individuals who wants to in a long time store their assets, by doing this stable coin helps facilitates economic growth and stability.

• REPRESENTS A FIRST STEP TO DIGITAL ECONOMY

When it comes to users and individuals who allow the volatile nature of cryptocurrency to stop them from taking advantage and leveraging the cryptocurrency markets and all the services it has to offer, the stable coin owing to the fact that it addresses this issue can represent the first step for this ones to take into becoming participant of the cryptocurrency market.

Once this individuals and potential users are now free to invest and participate in the cryptocurrency market, the adoption of cryptocurrency as a whole will significantly increase and as a result fostering and encouraging growth in digital economy and finances.

Additionally because of the stability of stable coins, it allows it's users to take part in a wider range of online commerce, it further gives them the opportunity to take part or partake in a pool, a deep pool of financial services.

• FACILITATING MICROFINANCE AND LENDING

I cannot really say for other countries, but what I noticed about how these online banks and remitting platforms we have today like opay, palmpay, fair money and the rest became popular and widely adopted by the Nigerian youth is by first offering loan services, fast transaction services at no charge, they offer rewards for transactions.

The same way too stable coins can help attract users and facilitate microfinancing and lending services on a much larger scale than opay or Palmpay because just like them cryptocurrency (stable coin) offers superior services, requires little to know verification and is decentralized.

Additionally stable coin being a cryptocurrency can help significantly enhance and improve the efficiency of microfinancing and lending services, because of its features such as smart contracts and the rest it is able to facilitate transparent transactions, increase transaction processing speed and low transaction processing cost.

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CONCLUSION

I would like to say a very big thank to everyone who made the effort to read and go through this post which I have made, and I hope that you have been able to learn a few things for example, like some of the significant roles in which stable coin plays in the financial market.

Some of these significant roles as I have judiciously explained in the above subheadings, includes the following; Facilitating microfinance and lending, facilitates better remittance services, represents the first to digital economy and mitigating volatility of cryptocurrency.