Stablecoins Push Acceleration of Big Brands Into Crypto
PayPal, Visa, and Shopify are all on board
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This week’s article focuses on the recent strides made in the stablecoin arena.
Over the last couple of weeks, big brands like PayPal are finding value in launching stablecoin initiatives.
Be sure to check it out below by starting with the quick notes below.
Quick Notes
Satoshi Nakamoto emphasized the importance of online payments in the Bitcoin whitepaper….
And they continue to be a fundamental use case for cryptocurrencies and blockchain technology.
But leveraging cryptocurrencies for payments can be challenging to use, often due to issues like scalability, unpredictable volatility, and high gas fees.
Thus, stablecoins, which are pegged to fiat currencies, have gained significant transaction volume and are considered a "Killer App" in the crypto industry.
Big brands like PayPal, Shopify, and Visa recognize the value of stablecoins and have embraced stablecoin initiatives.
Even though Western consumers may not fully understand the value of these technologies….
Stablecoin issuers like Tether have seen substantial profits due to adoption in emerging regions.
Thus, the aforementioned brands are capitalizing on this market opportunity by partnering with protocols like Solana to create ecosystems with the potential to impact both consumers and businesses globally.
Major brands engaging with web3 protocols like Solana not only drive excitement to Web3 native ecosystems.
But creating new ecosystems catalyzes cryptocurrency adoption and broader industry growth.
Full Analysis
Payments is a core use case of cryptocurrencies and blockchain technology.
It is literally mentioned first in the Bitcoin whitepaper by Satoshi.
Satoshi writes about Bitcoin, “A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.
Payments are viewed as a crucial use case to cryptocurrency….
But using crypto products is not the easiest to use.
Many DApps are built and don’t have scalable infrastructure which leads to larger gas fees.
Thus, it hasn’t been feasible to exit the ways of the traditional financial system that includes paying with credit cards.
Interestingly, there is a rise of interest in stablecoins, a cryptocurrency that is commonly pegged to fiat currencies.
This is displayed as stablecoins surpassed both Mastercard and PayPal in transaction volumes in 2022 equating to 6.8 trillion dollars.
This volume and mass adoption is driving crypto experts like Anthony Pompliano to call these coins “The True Killer App of Crypto”.
But western consumers may not immediately realize the importance of stablecoins.
Thus, this technology may be overlooked as there are many exciting technologies that are expanding the innovation using blockchain.
Peter Johnson, Co-Head of Ventures at Brevan Howard, notes that there are 25 million addresses holding stablecoins and over 5 million weekly active addresses.
From the outside looking in, it seems like the primary use case for stablecoins is for trading….
But in actuality, they serve as a way for emerging markets.
Why, you might ask? ,
Because many of these regions use unstable fiat currencies, making it extremely difficult to transact with variability in value.
Ultimately, the emerging markets are adopting stablecoins in the manner that was intended from the inception of crypto.
This adoption in the regions has led to Tether generating a billion dollars in a quarter in profit.
Adoption of Stablecoins Will Drive Payment Innovation
Stablecoins are a major player in the transaction space globally.
But many of the systems that are used to make purchases do not have interfaces that enable transactions with crypto.
For western based companies, they do not have to as their primary customers likely make purchases through regular payments processes.
Thus, the demand is too low for them to embrace on-chain payments.
U.S. based companies have to be weary of leveraging certain technologies due to the enforcement from regulators.
This may change soon as sentiment has skewed positive due to the recent crypto wins vs the SEC…
But the lack of proper frameworks still causes major challenges for U.S. crypto businesses.
Thus, the risk tolerance is very low for many businesses looking to enter the crypto space.
Despite these challenges, some businesses are trailblazing the use of stablecoins in various use cases.
Big Brands Accelerate The Stablecoin Revolution
Recently, there have been developments major brands in particular have embraced the stablecoin revolution.
PayPal, Shopify, and Visa have all in the last few weeks announced new stablecoin initiatives.
These initiatives all have the capabilities to impact the way that money is spent and moved.
Ultimately, by investing in stablecoin initiatives, established brands are not only giving insight into where the future of money is going…
But they will also serve as major crypto adoption catalysts.
Thus, it seems like these stablecoin projects are at the ground floor of bigger visions using blockchain technology.
PayPal Is Challenging Crypto Natives With Its Own Stablecoin
PayPal’s new stablecoin PYUSD is an instant game changer in the space.
PayPal currently has over 400 million users that will ALL gain access to the stablecoin.
But what is equally impressive is that PayPal has nearly 30 million merchant accounts.
With the large user reach on the consumer and business side…
PayPal has the infrastructure to facilitate an ecosystem of transactions within its own platform.
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PYUSD is a catalytic event in crypto space.
But to reach its potential, PayPal will need to educate its users to be able to drive usage of their stablecoin.
Thus, PayPal will need to create materials that promote the advantages of stablecoins.
One example that PayPal could follow is following the lead of the biggest crypto brand, Coinbase.
Coinbase sets an example for what customer learning and development could be.
The platform incentivizes users to use the new products and give their users rewards for doing so.
While the allure of no payment fees is inherently a plus with PYUSD, PayPal must give rewards to prompt the use of its stablecoin.
Kavita Gupta, founder of the Delta Blockchain Fund, mentioned in her interview with Bloomberg the prospect of PayPal bringing the necessary credibility for US regulators to accept crypto.
Visa Is Getting Ahead of the Times
It should be applauded that Visa isn’t resting on its laurels as a dominant player in the payments arena.
But entering the crypto space is probably a necessity for the business
Therefore, Visa was forced to make a decision to either ignore innovation, acquire a crypto business OR….
Build an innovative crypto team In-House!
As you can tell by the excitement, Visa elected to build in house and has demonstrated success.
Led by Head of Crypto, Cuy Sheffield, the company has established over 65 wallet partners. These partners include crypto leaders Coinbase and Circle.
The team partnered with emerging creators in the NFT space like Micah Johnson, creator of AKU.
Moreover, the company launched a fast track program which brought a pathway for companies like Crypto.com to issue visa cards.
Visa is taking a different approach as it expands its stablecoin settlement capabilities.
The credit behemoth is partnering with the Solana Blockchain.
This decision to work with Solana is perplexing do the issues the protocol has had with reliability.
But we can assume Visa wouldn’t expand to this chain if the protocol didn’t align with the company’s standards.
Thus it can be expected that Visa’s other partners Worldpay and Nuvei will be able implement this technology with their robust set of customers.
Worldpay and Nuvei as merchant acquirers will be catalysts in driving an abundance of transactions to both the Solana and Ethereum blockchains.
More transactions conducted on these chains will elevate the utility of blockchain which is better for the industry as a whole.
Shopify is Activating Global eCommerce
Shopify, an online platform designed to help businesses build eCommerce stores.
The company has a stronghold in this market as it accounts for over 10% of the U.S. eCommerce market.
This 10 percent of the eCommerce market accounts for over 400 billion dollars of global economic activity…
But Shopify recognizes that global eCommerce has more growth potential.
Stablecoins are increasingly viable solutions for the movement of money among emerging economies.
These developing economies often struggle with currencies that consistently suffer from financial hyperinflation, currency depreciation, and excess transaction fees.
Taking into account the rising popularity of using stablecoins, Shopify has enabled stablecoin payments via the Solana Pay plug-in.
The initial payment option for this new activation is with Circle’s stablecoin, USDC, which is the second largest in the world by market capitalization.
By performing this partnership with Solana, Shopify enables millions of merchants to accept stablecoins.
This integration unlocks new opportunities and customer bases for the millions of merchants leveraging the Shopify platform.
With over 60 percent of Shopify merchants being US-based, it gives merchants the ability to strive for a worldwide audience.
Why?
Merchants will receive payment in a relatively stable currency that is familiar.
From a buyer’s point of view, stablecoins reduce fees significantly which can make purchasing from US merchants more feasible.
Stablecoins are no longer a long-term aspiration and have strong near-team capabilities.
But long term they also could be game-changing for the eCommerce industry.
eCommerce is GLOBAL
And stablecoins enable the decentralized ethos of crypto to drive worldwide commerce.
Costs and barriers from traditional financial systems potentially are friction points for growing businesses.
With its partnership with Solana, Shopify is a bridge to unified commerce.
Users globally can set up Shopify stores and sell quality products to customers with a set price.
With all merchants from around the world being able to accept stablecoins, global competition will increase, making it easier for buyers to find the best prices.
Stablecoins Are The Tip of the Iceberg For Established Brands
Stablecoins draw more interest in the crypto industry globally.
Their use cases are growing beyond trading and are garnering real world utility globally.
But just like any other industry…
Incumbents will try to adapt to compete with disrupters.
Thus, incumbents of the payments space like Paypal, Visa, and eCommerce giant Shopify, are launching stablecoin capabilities.
These recent developments have brought excitement to the Solana ecosystem…
And despite the questions of decentralization or network shutdowns, Solana gained the trust of prominent brands.
Ultimately, stablecoins will be a gateway to new ecosystems created by these current market leaders…
And they will drive more curiosity to the crypto industry which can be a catalyst for adoption.
Once stablecoin interest and usage increases, the use cases will continue to expand which will propel the entire industry forward.