Bitcoin vs. Stablecoins: Who’s the Better Competitor in the Payments Revolution?

The world is ready for cryptocurrency, according to the latest surveys from Deloitte, PYMNTS.com and BitPay. So… what crypto could actually make a currency out of it? Bitcoin (BTC-USD)…or stablecoins?

Source: Dilok Klaisataporn/Shutterstock

We’re getting some interesting answers to the question lately. Let’s review recent developments and see what investors can do about it in their portfolio today.

Survey indicates consumers and retailers are attracted to crypto

Tuesday’s report from PYMNTS.com and BitPay contained some of the most important numbers I have ever seen. When researchers surveyed 2,334 consumers and 202 merchants in February and March, they found:

23% of consumers said they had held crypto at some point in the past year. This jumped 16% the previous year.

46% of merchants reported accepting crypto payments. which amounted to 85% merchants with $1 billion or more in online sales per year.

55% of consumers with crypto viewed it as an investment, while more like 30% obtained the crypto for “transactional reasons”. This reasoning was significantly stronger among Gen Z and Millennials: 37%.

85% of merchants felt that increasing crypto payments would help them attract new customers, and 81% of them appreciated the ability to “cut the middleman” out of the transaction.

77% of merchants accepting crypto said transaction costs were lower. The researchers noted that they would be charged around 1%, compared to 1.5% to 3.5% for credit cards and other payment methods.

Deloitte’s survey (conducted in December) focused more on future crypto plans at retailers, according to 2,000 senior executives surveyed.

64% of these retail executives have seen “significant consumer interest” in crypto. 54% executives of major retailers have so far invested more than $1 million in crypto payment systems.

85% retail executives agreed, “My organization expects digital currency payments to be ubiquitous in our industry in 5 years.” For 47% of them, enabling crypto was a “very high priority”, while it was a “high priority” for 38% After.

So… Is it Bitcoin Ready for payments?

Bitcoin was the big winner in the consumer survey conducted by PYMNTS/BitPay. Almost 17% of respondents had held BTC in the past 12 months (or have now), versus ten% for Ethereum (ETH-USD), 9% for Dogecoin (DOGE-USD), and just 6% for Litecoin (LTC-USD), 5% for USD coin (USDC-USD), and 4% for BinanceUSD (BUSD-USD).

Most “altcoins” were barely known to other respondents: between 10%, 20%, even 30% had heard of other cryptos – compared to 74% who knew about bitcoin, even if they had never owned it.

It’s no secret that bitcoin has still been the biggest name in cryptocurrency, worldwide. And naturally, bitcoiners will point to a long list of reasons why BTC is perfect for payments.

Here is the argument of the crypto exchange Bybit from Singapore, quoted in Cointelegraph in June:

“Bitcoin on Lightning [Network] is disintermediated, has built-in finality, faster, more secure, and is much cheaper in transaction cost than the ~3% credit card fee.

There is just one major downside – but it’s definitely is major: The day-to-day price volatility of BTC. (Or hourly!)

Volatility is probably the most well-known thing about crypto. Indeed, it was the #1 problem or deterrent for merchants, according to the PYMNTS/BitPay survey. 63% traders who do accepting crypto always said it was a problem they had.

Bitcoiners also have an answer to this: “Payment does not necessarily need to be settled in BTC since the Bitcoin network can take dollars, convert them to BTC and transfer them over the network and convert them back to dollars at the same time. ‘arrival”. the communications guy for Bybit said Cointelegraph.

Indeed, converting to dollars is what is already happening with popular crypto payment platforms like PayPal (NASDAQ:PYPL), directly at the point of sale. And 93% of merchants in the PYMNTS/BitPay survey said consumers use PayPal as well as Venmo in their store.

But this argument assumes that money is the penalty settle. Globally, many people are embracing crypto precisely because their local currency is NOT worth it.

Look at Argentina, which has some of the highest crypto adoption rates in the world – while it happened there:

“In 2016, before inflation really took its toll, a dollar could only buy about 14.72 Argentine pesos. However, six years later, one dollar can buy up to ARS 125.5,” reports Cointelegraph.

Thus, settling bitcoin transactions in local currency may be appropriate in larger economies. But everywhere else in the world, that’s exactly what people are trying to avoid with crypto in the first place.

Meanwhile, stablecoins are becoming popular

“In addition to Bitcoin, Argentines are increasingly turning to stablecoins as a way to store value in US dollars,” which their government officially prevents them from doing otherwise, notes Cointelegraph.

It’s Argentina. But stablecoins are also becoming increasingly common in the European Union, for example.

Now that USD coin (USDC-USD) is getting ahead in the stablecoin market for the world’s #1 currency, the company that created it (Circle) has just launched one for the #2 currency: euro coin (EUROC-USD).

“The European Central Bank (ECB) has long wanted to make instant payments available to all” European payment service providers (PSPs), according to Ripple (XRP-USD), which has established itself in Estonia.

“While SEPA Instant Transfer provides instant payments to participating PSPs, it still requires clearing of transactions and establishment of final positions for settlement by clearing companies or even pre-funding in some cases,” the blog post points out. Ripple.

Looks like Euro Coin could help with that. And Banking Circle – which does cross-border transactions in Europe, including the UK – announced yesterday that it will use USD Coin to meet “customer demand to pay in cryptocurrency”.

It’s the kind of thing that has economists at the US Federal Reserve saying that stablecoins “could actually strengthen [the role of the U.S. dollar] medium term. Even China now admits, “Once they’re fully regulated, they’re fine.”

Great, but how to invest?

The spotlight may have been on stablecoins in recent months… But a crypto designed to stay at $1.00 is hardly an investment.

However, if a platform has a stablecoin with a good reputation – then people using stablecoins for financial professions can make this platform a great investment as this payments revolution continues to gain momentum.

Take a look at Binance Coin (BNB-USD) and ManufacturerDAO (MKR-USD) for that. BNB and MKR are the native cryptos of the organizations that brought you stablecoins #3 and #4: BinanceUSD and Dai (USD-DAI), respectively.

Binance Coin is a pretty simple game: if you trade on Binance – the #1 crypto exchange in the world – you can save 25% by paying your trading fees in BNB. Fees on Binance are already low for crypto.

Other exchanges like Coinbase (NASDAQ:PIECE OF MONEY) are aimed more at large institutions. But Binance is the king of retail crypto traders. In May, Binance even Coinbase “overturned” as the exchange with the most bitcoins, as institutions seemed to pull BTC from Coinbase in large batches since March.

BinanceUSD rapidly increased its market capitalization to fill the hole left by the previous #3 stablecoin, TerraUSD. And in all the chaos lately, Binance – led by CEO Changpeng Zhao, who seems pretty level-headed – has been a resource for small teams… not a part of the drama.

Binance has a whole list of ways to use Binance Coin itself for payments, online services, and even travel. Ultimately, I would say that stablecoins are the competitor to watch in the payments revolution.

As of the date of publication, Ashley Cassell had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines. To get more news from The New Digital World delivered to your inbox, click here to subscribe to the newsletter.

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