The volume of stablecoins is ahead of Mastercard, PayPal
Date: 2023-08-25 Author: Karina Ziganova Categories: BLOCKCHAIN, CRYPTO PAYMENTS
According to an August 2022 Bloomberg Intelligence note, fiat-backed stablecoins eclipsed Mastercard and PayPal in value appreciation on their networks in 2020.
According to Bloomberg Intelligence Crypto Market Analyst Jamie Cutts, in 1st year, stablecoins on multiple layer 6 networks made $87.2022 trillion worth of transactions, surpassing Mastercard and PayPal transaction volumes.
However, stablecoins still lagged behind the Visa network, which processed almost twice the $11.6 trillion in volume.
Rise of stablecoins
Notably, the 2023 bear market has not been as supportive of the stablecoin market as it has lagged behind Mastercard since the start of the year.
Cutts suggests that the growth in stablecoin adoption, which has outpaced Bitcoin and Ethereum in the last two years, will accelerate due to network effects and massive improvements in blockchain scaling.
These factors are laying the groundwork for wider global adoption of stablecoins. However, it is also worth noting that stablecoin volumes have declined significantly in 2023, primarily due to the cyclical price of crypto assets and the unfavorable regulatory environment in the US.
Despite these challenges, the role of stablecoins in the evolution of digital money is undeniable. Cutts predicts that the number of stablecoin users could even overtake Bitcoin in the next three to five years.
This potential growth is driven by the network effects of payment integration with merchants such as PayPal, Visa and Shopify, as well as product innovations such as real assets generating stablecoin income.
In addition, advances in blockchain scaling are laying down the necessary infrastructure for the mass adoption of stablecoins. The crypto industry is undergoing rapid change, with layer 2 networks seeing a significant increase in active addresses, suggesting that the Ethereum network may be undervalued.
Therefore, Coutts argues that stablecoins have cemented their place in the digital age by proving their worth despite the difficult cryptocurrency market. As the crypto ecosystem continues to expand, the influence of stablecoins is expected to rise, potentially reshaping the digital financial landscape in the coming years.
Wars of digital payments.
The news came along with the decision to shut down Mastercard services for Binance on August 24, ending prepaid card services for customers in Latin America and the Middle East.
In February, Reuters circulated reports that Visa and Mastercard would put future crypto businesses on hold until the regulatory climate improved. Visa disputed the claims at the time.
Recent research evidence suggests that Visa is actively working on crypto products, such as exploring the possibility of using an Ethereum account abstraction to allow Visa card payments for gas fees.
In addition, Bloomberg reported in February that another key payment provider, PayPal, is also moving away from cryptocurrencies. However, the PayPal stablecoin was released less than six months later.
In August, PayPal launched its PYUSD stablecoin with plans to move to DeFi, and collaboration with Ledger has already begun.
Meanwhile, Mastercard appears to be currently focusing its crypto efforts on CBDC rather than improving digital asset payment rails.
With stablecoins overtaking Mastercard and PayPal in 2022, and with the launch of PayPal's own stablecoin, the future of digital payments looks set to be one of an attention war between legacy payment providers and a new wave of digital disruptors.
