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.”
Read more: SA crypto exchange predictions for 2021
Read more: SA cryptocurrency exchange secures investment
Featured image: Marcus Swanepoel , Luno CEO and co-founder (Supplied)
Is Tether A Reliable Stablecoin Or Is It A High-risk Asset?
Is Tether A Reliable Stablecoin Or Is It A High-risk Asset?
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@ anti-danilevsky Anti Danilevski Founder & CEO at Kick Ecosystem. Crowdfunding & Blockchain evangelist since 2009
It’s no secret that most traders seek to lock in their profits, but due to the high volatility of cryptocurrencies, this has been quite problematic to do. This is because users need to exchange their cryptocurrency assets for fiat currency to pay for various goods and services and to trade on the market.
Doing this without involving fiat currency and constant withdrawals is quite troublesome. Stable-coins, crypto-assets that help lock profits at a ratio of about 1:1 to major fiat currencies, have come to save the market.
One of the most in-demand and popular cryptocurrencies on the market is USDT (Tether).
Small backstory
USDT cannot be mined, and there is no limit to the tokens that can be issued. According to the founders, this is made possible because the cryptocurrency is secured by real assets.
It is this fact that raises the most doubts in the cryptocurrency community. This skepticism is also reinforced by the absence of a third-party audit of the company.
At the same time, on its official website Tether states that USDT is not money and they have no real price, and the company does not have to guarantee the value and security of each token.
Also, the company has no obligation to return USDT to users and reserves the right to refuse service and compensate users who violate the user agreement. If Tether goes bankrupt, alarmists caution, no one will return funds to users.
Nevertheless, the founders have repeatedly assured that they do not pass third-party audits only to maintain commercial secrecy, and the official project website regularly publishes reports on the security of the coin with real assets.
Another complaint against Tether is considered to be its centralization. A number of experts believe that this can lead to uncontrolled monetary emission. But if we consider USDT a hybrid of both cryptocurrency and fiat, its centralization is more likely to demonstrate its similarity to conventional fiat institutions.
Is Tether as scary as they make it out to be?
It is also worth noting that despite the skeptical statements towards Tether, the share of Tether on the market, from 2017 to 2020, exceeded 70%!
This indicates both a great market need for this kind of asset, as well as user confidence in this stablecoin. Let’s imagine, though, that USDT is actually not backed by anything.
Is it really that scary and threatening for the cryptocurrency to collapse drastically and lose a lot of money? We should start with the fact that fiat money should not appear out of thin air either; every ruble, dollar, euro and other state currency should be secured by foreign exchange reserves.
However, both because of the political situation and because of a number of other factors, no audit has been made for quite some time, and no global collapse has yet occurred because of this. It is doubtful that every fiat unit in the world is really backed by gold.
People have just come to a consensus and the market accepts it, so the question of whether this or that currency is backed by gold hasn’t been raised for a long time.
Public consensus is what many currencies are based on. The public demand for purchasing and storing Bitcoin can also explain its current solid price, along with some other currencies. We should also consider the growing interest in USDT from institutional investors, who never invest in high-risk assets.
Therefore, the likelihood of a stablecoin collapse is currently minimal.
How can the risks be minimized?
While trading, nevertheless, one should take into account the market conditions and not “put all their eggs in one basket”.
The key to success for any trader is asset diversification and systematic control over them. USDT is an indispensable tool for locking in profits and withdrawing funds, but you should at least keep some of your assets in good old Bitcoin.
It is also worth keeping an eye on the fiat dollar rate when deciding to commit profits to this altcoin. After all, it would be a shame to lose profit because of yet another witty statement made by some Twitter politician.
But in any case, USDT is one of the best stablecoins on the market and has no equivalents, and we hear various theories on the possible collapse of various altcoins every day.
In order to stay up-to-date on the latest cryptocurrency rate trends and forecasts, sign up and get reliable information from KickEX.com every week!
(Disclaimer: The author is the CEO at KickEX)
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