Forget bitcoin, card firms should embrace stablecoin payments - Gartner
Research house Gartner has poured cold water on Visa’s recent move to support bitcoin trading on its network, arguing that the real revolution in payments would see centralised financial companies support stablecoin transactions on blockchains.
Earlier this week Visa outlined plans for the first pilot of its new suite of crypto APIs, following other industry players such as PayPal and Square in embracing the digital currency movement.
Gartner analyst Avivah Litan says that the move is welcome, and increase the “technical rails between consumers, businesses and blockchains, and help prepare the transition to future payment infrastructure”.
However, in a blog, she also notes that it is “hardly a revolution”. Having centralised financial companies that earn revenues by charging transaction fees at the centre of crypto goes against the peer-to-peer ideals of blockchain payments.
“Potential users are left to wonder if, in the future, they will have to pay these centralised services additional transaction fees for moving cryptocurrency across peer-to-peer blockchain networks, defeating the promise of blockchain,” writes Litan.
Her answer to this problem is for card brands and other established players to provide the on and off ramps for payors and payees using stablecoins, without being involved in the actual payment that would occur on the blockchain.
This would mean Visa and its peers would not get a transaction fee but would make money from issuers and acquirers using services such as risk management, onboarding and protections for balances.
Concludes Litan: “The question remains: will these centralised financial services companies go forward in line with the spirit of blockchain peer to peer payments at the risk of cannibalizing their existing central-clearing house based-revenue streams? The answer will depend on whether or not these firms have any practical choice.”
Luno crypto platform adds US dollar stablecoin
Luno, one of South Africa’s leading cryptocurrency exchange platforms has announced the addition of USDC, one of the most secure stablecoin on the market to its current offering for users.
Luno adds US dollar stablecoin to its current offering
In an official press statement, Marcus Swanepoel, CEO, and founder of Luno comments on the addition of arguably the most stablecoin on the market.
“Broadening our platform with the addition of USDC is an exciting move for us and our users. With Bitcoin and others, including Ethereum, reaching all-time highs, cryptocurrencies are in the limelight and the opportunity is certainly ripe for investors and traders to take advantage.
What does this mean for Luno customers?
As USDC is stablecoin that is tied to the US dollar, it provides Luno customers the opportunity to store their wealth in the world’s reserve currency. The US dollar has showcased consistent dependability when compared to volatile currencies across the 40 countries in which Luno operates.
US stable coin will be offered in addition to the current offerings of Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and Ripple XRP.
According to Luno, the coin will be available for instate buy.
Benefits of the US stablecoin
Aside from offering stability, US stablecoin has the following benefits for interested traders:
US stablecoin is one of the safest and best-regulated stablecoin currently on the market
It is fully collateralised, which means that its reserves are held on a one-to-one ratio with the US dollar. Essentially this means that for every one USDC, the original issuer of the coin holds 1 US dollar in collateral
Records of its reserves are audited monthly by Grant Thorton, a leading account firm
Swanepoel points out that stablecoins are less volatile than cryptocurrencies because their prices is backed in a ratio of 1:1 to the US dollar.
‘”Cryptocurrencies like Bitcoin and Ethereum remain volatile currency options. The introduction of USDC empowers our users to hedge against volatility during market dips and ensures they can quickly and easily access funds on the platform when they want to trade or invest.”
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Featured image: Marcus Swanepoel , Luno CEO and co-founder (Supplied)
Morgan Beller says stablecoin project Celo is like ‘Venmo for crypto’
Morgan Beller, a former co-creator of Libra — now known as Diem — has joined the stablecoin project Celo as an advisor.
Beller quit Diem last September and joined venture capital firm NFX as a general partner. In her advisory role at Celo, Beller aims to help the project on initiatives like adoption and developer strategies, she told The Block in an interview.
“I love Celo’s mobile-first global approach,” Beller told The Block. “It’s really like Venmo for crypto.”
Venmo is a mobile payment service owned by PayPal and allows people to transfer funds within the U.S. Celo, on the other hand, helps users share Celo dollars (cUSD), each pegged to track one U.S. dollar.
Celo is a decentralized stablecoin project focused on payments as a use case, especially for the unbanked and underbanked communities. The project was launched in March last year and helps exchange money via a mobile phone. According to Coinbase, the Celo Dollar possess a market capitalization of around $33 million, with roughly $104,000 in volume during the past 24 hours.
Beller’s new advisory role comes as the ecosystem for stablecoins — and the outstanding supply of said coins — continues to grow. It remains an ecosystem dominated by USDT, the stablecoin issued by Tether, though stablecoins such as USDC, BUSD and DAI have expanded their market share.
The conversation around privately-issued stablecoins arguably exploded into public view when the now-renamed Libra made its public debut. Introduced in June 2019 and backed by Facebook and other firms, Diem has yet to launch, having faced significant regulatory scrutiny in the wake of its unveiling. The project has since revised its initial approach, brought in a range of traditional finance veterans to guide the association that oversees its development, and, to some extent, turned its gaze to the nascent world of central bank digital currencies, or CBDCs (Beller declined to talk about the project in the interview).
‘Grasroots stablecoin movement’
The potential for stablecoins to solve real problems for people is what attracts Beller to the industry the most, Beller said. That includes people in countries where their national currencies suffer from “tremendous inflation,” and are a “terrible store value,” as well as jurisdictions in which governments can seize accounts and the money inside them, said Beller.
Beller said she sees Celo more than Venmo for crypto because beyond just sending and receiving funds, it also acts as a “store of value.” “It’s giving them a savings account, and it’s giving them security,” she said.
Still, most stablecoins today are used for trading arbitrage, said Beller.
“So it’s in the hands of a few people, but really big volumes, so this is like top-down. I see Celo really as the bottom-up, grassroots stablecoin movement where it’s small balances by a lot of people.”
Stablecoin growth and looking ahead
Beller also spoke to the general timing of the emergence of stablecoin platforms like Celo and the broader global context within which this growth is occurring.
“I think that their timing was a blessing to the people who need it the most and that we’re in a global pandemic, remittances are very expensive, both as far as cost and as far as time is considered,” said Beller. “So Celo has been helping people send remittances for less than one cent fees during the pandemic, which you know, it gives you goosebumps.”
Looking ahead, Beller said that “Celo has big future plans, really big plans,” though she did not disclose specific details. In the interview, she highlighted a new euro-pegged stablecoin that Celo is planning to launch.
Both Diem and Celo have some common investors, like Andreessen Horowitz (a16z) and Coinbase Ventures. Beller previously worked for a16z.
When asked if NFX has invested in or has plans to invest in Celo, Beller said since NFX invests in early-stage startups, Celo is “just outside of the investment criteria of the fund.”