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Stablecoin and Borderless Payment Benefits

Most people understand that all cryptocurrencies are equally volatile. But in fact, there are still stable cryptocurrencies in the world. We call it stablecoin, and now it’s playing an incredible role in promoting Borderless Payment, or cross-border Real-Time Remittance.

But before we get there Let’s get to know Stablecoin better, what it is, how many types it has, why it has the opportunity to gain popularity, and how important stablecoin is to Borderless Payment.

What is stablecoin?
Stablecoin is “cryptocurrency or digital currency with fixed value. It uses various mechanisms to fix value, such as fiat currencies, assets or coin algorithms, etc.” It has the benefit of giving people more freedom and freedom to choose their money. Especially in countries that suffer from currency depreciation or inflation, so if stablecoin is accessible to everyone, there is no need for any one currency anymore.

How many types of stablecoins are there? There are four types of stablecoins:

1. Fiat – collateralized: supported by fiat money.

This type of stablecoin is supported by various global currencies (Fiat) such as the dollar, euro or baht, for example, making its prices close to or equal to real-world currencies. This type of stablecoin can be traded at any application or website that is an intermediary of exchange.

Example

Tether (USDT) is a stablecoin with a reference to the US dollar. Currently, $1 USDT is equal to $1 and is the No. 1 stablecoin in the cryptocurrency market.

2. Commodity – collateralized: supported by commodities.

This type of stablecoin is usually supported by various assets in the world such as gold, oil, land, stocks, instruments or funds. There are also some stablecoins that support other commodities such as metals.

Example

• Digix Gold (DGX) is a gold-based stablecoin. One coin is equal to 1 gram of gold. It can be exchanged for real gold in Singapore.
• Tiberius Coin (TCX) is a stablecoin supported by various metals used in the manufacture of electronic devices.

3. Crypto – collateralized: supported by cryptocurrencies

This type of stablecoin is supported by cryptocurrencies. The good thing is that it can build its own credibility. because the system will be decentralized That does not refer to any intermediary, but has the condition that it has to put more crypto than stablecoin created to be able to do it. Because crypto very high volatility If the crypto’s value goes down, there is a chance that the money will be cut immediately.

Example

Dai is a stablecoin on the Ethereum blockchain, the ERC-20 token accepted by MakerDAO can be used as collateral to withdraw its DAI.

4. Non – collateralized: not supported by anything.

The creation of this type of stablecoin is not supported by anything. Therefore, the manipulation of the value is a reduction in interest or a cut in supply, just like the current regulation of the value of conventional currencies. For example, from the original $2 market cap, the system will Generate more coins to reduce the value of the coin to 1 dollar.

Example

Basis is a stablecoin that reduces the supply of coins to keep the coin’s value stable.

Why stablecoin always has the opportunity to gain popularity

• The global economic crisis and the risks of the contracting countries are increasing
• Other currencies began to fluctuate against the relatively more stable dollar.
• More stablecoins are being used for payments.

How is stablecoin important to Borderless Payment?

As mentioned above, the benefits of stablecoin give people more freedom and freedom to choose their money. It doesn’t need any one currency anymore and is definitely important to Borderless Payment or international payments.

Usually, foreign payments require an intermediary such as a bank to transfer to the destination. which requires an agreement on currency Therefore, either party may be at a disadvantage. Also, the fee is quite high and it takes 3 days to process.

But with stablecoin, we can pay in seconds 24/7 without worrying about exchange rates. This is suitable for countries with very limited payments, and the fees are almost as low as free transfers. This is where stablecoin comes into play with Borderless Payment, which is now being developed to support stablecoin transactions at the B2B level.

Summary

Stablecoin has a chance of gaining popularity. But will have to come to see if they can beat the old payment method or not. Because now there are still restrictions on the law and use. If more stablecoins are created, more rules will be needed. And to be accepted without the state involved is not easy. Besides, if future cryptocurrency market is not working, stablecoin mass adoption that must be supported by crypto it is difficult