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Evolution of payments to stablecoin
Jonah Kim, chapt gpt, Gwen P Shutterstock
From minted coins and paper notes to credit cards and electronic transfers, money’s development has been a march towards greater convenience, efficiency and safety. Stablecoin issuers now view themselves as the latest stage in this journey.
With stringent Know Your Customer (KYC), Anti-Money Laundering (AML), credit history, and solvency requirements, the modern financial system excludes many individuals and small-and-medium enterprises (SMEs) in the developing world from participating in the global, dollar-based economy.
According to Mento Labs, a decentralized stablecoin platform, “nearly 2.5 billion people (a credit gap of $4.9tn)...are excluded from formal financial services.” From Mexican farmers lacking credit histories to cash-strapped Indonesian SMEs, developing consumers’ demand for capital has been walled in by regulatory and technical barriers.
Despite stablecoin’s origin as a liquidity tool for specialized crypto traders, the technology is now billed as an inclusive upgrade to a traditionally Western-dominated financial system. This focus on efficiency and ease-of-access is reflected in many current issuers’ value propositions.
The current stablecoin market
Early stablecoins, like BitUSD, NuBits, and TerraUSD, used algorithms and crypto collateral to prop their peg to the dollar. These pillars collapsed in market downturns, prompting most issuers to shut down, their tokens worth only a small fraction of real dollars.
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