Stablecoins are a fascinating variation of the standard crypto, offering the decentralization and anonymity of blockchain combined with the stable value of fiat currencies.
Stablecoins arrived on the crypto scene in 2014. However, their success and market significance is much more recent. Stablecoins were Conceived to bridge the gap between fiat and cryptocurrencies.
They were intended to deliver the best of both worlds. So, stablecoin creators designed it to have the stability and real-world value of fiat combined with the speed, anonymity, and low costs of crypto.
So, on paper, this is a perfect fusion of two different financial assets, but stablecoin has thus far struggled to capitalize on its exciting premise. As of 2023, stablecoins are definitely on the rise, gradually creating a market of traders and investors who wish to enter the crypto industry without the prevailing risks.
However, the value of stablecoins has yet to be uncovered by small and medium-sized businesses worldwide. Many experts believe that stablecoin could be the missing ingredient for numerous growing businesses to acquire a competitive advantage and accelerate their growth.
The Value of Stablecoins for Global Commerce
When the crypto concept spread worldwide in the 2010s, businesses became increasingly interested in this disruptive technology. Potentially, crypto could solve many problems that small and mid-sized businesses deal with and make them significantly more competitive on the international stage.
However, crypto transactions lacked the dependability of fiat, so numerous businesses abstained from implementing crypto as their payment options. However, stablecoins changed that equation by supplying all the benefits of both crypto and fiat with seemingly no drawbacks.
While stablecoins could be a mundane investment opportunity for day traders in the crypto market, they are a perfect match for businesses that aim to go cross-border.
So, let us recount the principal benefits your business can expect when adopting stablecoin into your existing financial system.
Benefits of Stablecoins for Businesses
The advantages of adopting stablecoins are far greater for businesses compared to traders and investors. Due to the lower price variation, stablecoins do not promise the most exciting yields for investment. They, however, promise stability and reliability that is invaluable for growing businesses.
Unlike the rest of the crypto market, many businesses are interested in implementing crypto for flexibility and technological upside and not the forecasted price increase. When adopted properly, stablecoins can completely transform the way businesses operate on a global scale:
The crypto world is known for its global reach that transcends geographical limits. While fiat transactions often take unreasonable periods to execute, crypto funds can be transferred in a matter of minutes. Stablecoin is no different from other crypto coins in this matter.
In some cases, longer waiting periods are not a big problem for large businesses, as they have credit lines and sturdy supplier-customer relationships. However, for small to mid-sized businesses, the terms are not as welcoming.
Any small or mid-sized business striving to make its mark on the international market needs flexibility. Since most up-and-coming businesses have limited budgets, liquidity is crucial, and swift cross-border transactions might be the X factor in this equation.
Imagine sending and receiving payments at a moment’s notice regardless of location or even continent. With stablecoins, businesses will no longer be tied to their local markets, having the freedom to transact with anyone across the globe.
Moreover, stablecoins let you receive generated revenue in minutes, giving you a chance to restock your inventory or pay your salaries on time. As a result, your cash flow will be much more active, letting you cover your liabilities rapidly and increase your selling volumes.
Nothing beats stablecoin transactions when it comes to the sheer speed and execution of transfers. As discussed, most stablecoin transactions take several minutes, some can even go through immediately, giving you a competitive advantage in many aspects.
Having such a speedy option of payment will attract suppliers and customers to have a steady relationship with your business. After all, time is money and the business world rewards those who contribute to saving it. So, adopting stablecoin can catalyze your business operations lifecycle, giving you more options on the market.
Low Transaction Fees
It is widely known that fiat transactions eat up a healthy share of your transaction value with various charges. But why are fiat transactions so costly? International fiat transactions need to go through several financial institutions, or even central banks, for approval and processing.
Each financial institution takes their share of profits for mentioned services. While these fees are minuscule individually, they accumulate to a significant figure, making your fiat transactions costly.
With stablecoins, you can forget aggregated transaction costs, since there is only one entity involved in your payment operations. The blockchain platform itself is the only party that requires fees, which are mostly negligible due to efficiency and speed of stablecoin platforms.
Healthy Relationship With Financial Institutions
In the modern economy, it is difficult to create a thriving business without involving liquidity providers. After all, your business needs that initial investment to hit the ground running, and therefore, it is always favorable to have financing options. Unlike traditional cryptocurrencies, stablecoins are viewed positively by various financial institutions.
Many banks and prime brokers even offer loans in the stablecoin currency to accommodate your needs. The USA and other counties are working vigorously to support stablecoin development on the market as the go-to alternative financing option.
Additionally, having stablecoin payment options signals that your business is utilizing the safest crypto option available on the market, increasing your chances of a healthier credit line or favorable financing terms.
Why Stablecoins Matter for Startup Businesses
While stablecoins are no strangers to significant obstacles on the crypto market, this commodity-tied currency is making tremendous strides to simplify global business transactions. From speed, efficiency and reliability to low costs and international outreach, stablecoins have the power to level the playing field for small and mid-sized businesses.
However, stablecoins are still digital assets that share numerous technical similarities with traditional cryptos. So, they still possess an inherent risk of volatility and system breakdowns. Thus, even with all of their advantages and capabilities, stablecoins need to be studied extensively before making a decision to adopt them in your ventures.