Point of Sale Crypto: Bitcoin vs Stablecoins

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Florida Governor Ron DeSantis announced Thursday, December 9, that he wanted to allow companies to pay state fees with cryptocurrencies. It would be wise to include stablecoins like USD Coin among them.

Celebrities and athletes like (more recently) star Rams wide receiver Odell Beckham Jr. take their salaries in bitcoin – and BTC-boosting Miami mayor Francis Suarez said a week ago that he wanted to do the same, as well as take the municipal ones. bitcoin fees.

Indeed, bitcoin was intended to be an everyday online payment tool and research shows quite clearly that people want to be able to spend crypto. Earlier this year, research from PYMNTS showed that about 18% of the U.S. population – roughly 46 million people – would be interested in trading with crypto. More recent findings have shown that two-thirds of cryptocurrency buyers have purchased them to complete a transaction.

Read more: Crypto Rewards Boosts Sales for Online Merchants

But he constantly runs into a problem. The price of bitcoin and other cryptocurrencies is too volatile, and transaction fees can be brutal.

Most importantly, people who buy bitcoin see it as a speculative asset and investment. You don’t want to buy milk with your IRA. You would like to buy a Coke with a fixed price of $ 2 at 0.000021 BTC – which will change in five minutes, to say nothing overnight.

And besides, no one wants to be Laszlo Hanyecz, who spent 10,000 bitcoins – currently worth half a billion dollars – on two pizzas on May 22, 2010. The anniversary of the first known use of the bitcoin to pay for goods is now a community crypto party: Bitcoin Pizza Day.

And while bitcoin payments are a big talking point, aside from places where local fiat currency is in serious trouble, such as Venezuela and to a lesser extent Argentina, it is not widely used. According to the crypto payment app BitPay – which works hard to make BTC a functional currency at the point of sale – just over 79,000 of its customers made payments in crypto in November, with 55% of them using the bitcoin.

Why Stablecoins

Stable coins linked to the US dollar, like Circle’s USDC, Paxos ‘Pax Dollar or USDP, and the industry leader’s USDT could become much more effective choices for point-of-sale payments than n’ any cryptocurrency.

Also Read: Scenes From The Five-Hour Congressional Hearing On Crypto

As proof, just look at the reaction of central bankers, elected officials and financial industry insiders to Facebook’s Libra stablecoin (renamed since Diem) proposal: to give nearly 2.9 billion users the ability to pay goods with a stablecoin, and this could adversely affect the use of national currencies.

Economist Xavier Vives, a leading regulatory expert and professor at IESE Business School, suggested in a recent interview with PYMNTS that the growing interest in central bank digital currencies denominated in fiat is at least in part a way of fight stablecoins – “to protect control.”

And really, that’s how they’re used. Top stablecoin Tether has a market cap of $ 76.1 billion and a 24-hour volume of over $ 70 billion – the vast majority spent at a specific point of sale: cryptocurrency exchanges.

Overall, stablecoins are now used to buy and trade cryptocurrencies. It’s easy enough to trade bitcoin # 1 for ether # 2, but when buying smaller cryptos it’s much easier to pay in stablecoins, if for no other reason than most Exchanges sell most of the smaller currencies for stablecoins, their own exchange tokens, and some high-end cryptos.

And they are gaining favor in the rear of financial transactions. PYMNTS research found that more than half of multinationals have used cryptocurrency – and of this group, nearly a third have used stablecoins.

See: Stablecoins use cases always emerge as changes, regulations loom

And there are strong arguments for them, as the President’s Financial Markets Task Force was quick to point out in its November stablecoin report.

Also Read: Chairman’s Task Force: Stablecoin Risk Mandates Legislation

“If well designed and properly regulated, stablecoins could support faster, more efficient and more inclusive payment options,” the report says. In addition, the transition to a wider use of stablecoins as a means of payment could occur quickly due to network effects or the relationships between stablecoins and existing user bases or platforms.

Related: Meta’s WhatsApp Launches Payment Pilot With Novi Crypto Wallet

Why not Stablecoins

Nonetheless, the report also found that there is a substantial downside risk associated with stablecoins, including “illicit financial problems and risks to financial integrity,” he said.

The report also highlighted the intended use of stablecoins in cryptocurrency trading: “The speculative trading of digital assets, which may involve the use of stablecoins to easily move between asset platforms. digital or in decentralized financing arrangements, presents risks related to market integrity and investor protection. “

There is also a broader risk for stablecoins, especially their ability to maintain the peg to a dollar (or other currency). While a number of stablecoins, like Circle’s USDC, Paxos USDP, and Gemini’s GUSD, are backed by dollars or highly liquid investments like Treasuries, others are more questionable.

There have been questions for years as to whether major stablecoin issuer Tether really had $ 76 billion in USDT-backed assets, and recent accounting – forced by a settlement with the New York attorney general. – showed that less than 3% was in cash and 65.4% in unspecified commercial. otherwise paper, known as corporate debt, of unknown quality and liquidity.

And others, like the No.5 stablecoin Dai, with a market cap of $ 6.4 billion, are based on algorithms that increase and decrease supply to keep prices stable, which are dependent on market demand. .

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NEW PYMNTS DATA: WHAT BRITISH CONSUMERS EXPECT FROM THEIR GROCERY SHOPPING EXPERIENCES

By the way: Forty-four percent of UK grocery shoppers spend more in grocery stores when they have access to loyalty programs, and an equal share say the presence of loyalty programs alone dictates where they shop. purchases. What UK consumers expect from their grocery shopping experiences surveyed 2,501 UK consumers to examine how retailers can make the most of loyalty programs to increase spending and gain new customers.

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