Source: Cointelegraph
Original: “The Evolution of Crypto Payments and Future Outlook”
Views from: Arthur Azizov, CEO of B2BINPAY
In the past five years, the world of cryptocurrency and crypto payments has undergone significant changes. Previously, the reputation of cryptocurrencies was often affected by the actions of criminals, but the ecosystem has progressed. Today, cryptocurrencies are more widely accepted, and their image has become increasingly positive.
This evolution has changed the way users and businesses interact with digital currencies. People are becoming more aware of the practicality and convenience of cryptocurrencies in everyday transactions. Even the mayor of Cannes has stated that the city plans to provide local businesses with access to cryptocurrency payment systems.
As this progress continues, the use of cryptocurrencies and stablecoins, especially Tether's USDT and Circle's USDC, is rapidly growing. For example, the total supply of stablecoins has reached a record of $187.5 billion, with trading volume surging by 30%-40% in 2024. However, we still have a long way to go.
Then and Now
In 2017, crypto payments were a niche but growing field, with transactions typically relying on Bitcoin and Ethereum. Interestingly, some may remember that USDT was initially issued on the Bitcoin blockchain, which made transactions slow and inconvenient, leading many users to prefer Ethereum as a more practical option.
Although stablecoin transactions have since become more convenient, concerns about centralization and the ability of issuers to freeze wallets still exist. This is why many users have turned to decentralized assets like Bitcoin and Ethereum (ETH) for peer-to-peer transfers, as these assets cannot be blocked.
Today, the payment landscape has changed significantly. Payments have shifted from digital currencies to stablecoins, as stablecoins are faster and cheaper. With this paradigm shift, we have seen the emergence of new stablecoins, some of which are regulated.
The scalability issues of Ethereum have prompted the rise of alternatives like Tron and Solana. With low transaction costs, Tron now handles over half of all stablecoin transactions. Meanwhile, Solana's high-speed, low-cost network has become a favorite among merchants, businesses, decentralized finance, and decentralized exchanges. Recently, TON has also emerged as a significant player, with millions of users utilizing USDT on that blockchain.
Regulation: Catalyst or Barrier?
In the past five years, we have seen an increase in regulatory scrutiny. The process? Quite chaotic. It showcases the resilience and adaptability of the crypto industry in the face of regulatory uncertainty. Let's see how this has been achieved.
In Europe, the Markets in Crypto-Assets Regulation (MiCA) is a milestone attempt to create a unified regulatory framework. While its provisions regarding stablecoins will take effect in mid-2024, implementation has been slow. Well-known exchanges like Kraken have yet to fully adapt to these new requirements.
On one hand, regulation encourages new players and businesses willing to operate under clear rules to enter the market. On the other hand, central banks are reluctant to allow traditional banks to collaborate with crypto companies, hindering broader adoption.
For example, although virtual asset service providers (VASPs) have existed in Europe since 2018, central banks remain hesitant to grant licenses to financial institutions to service crypto companies. This gap forces most crypto companies to rely on electronic money institutions and payment agents rather than traditional banking services.
In regions like the UAE and the US, the regulatory approach is more nuanced. The Central Bank of the UAE recently approved a local stablecoin, showing its willingness to embrace innovation. Meanwhile, despite the lack of comprehensive federal crypto regulations, the US continues to lead in trading volume.
The Future of Crypto Payments
Stablecoins will continue to play a foundational role in crypto payments. As blockchain technology becomes more widespread, we can anticipate the emergence of more stablecoins pegged to local currencies. Even though some recent attempts have failed—such as stablecoins pegged to the euro—the demand for local currency-pegged stablecoins will increase with the growth of global user numbers.
Many companies have already taken note of the success of Tether and Circle. Their model is simple: deposit dollars into repurchase agreements backed by US Treasury bonds—like $120 billion—earning about 5% annually. For example, $100 billion at a 5% yield would generate $5 billion in revenue. This certainly piques the interest of others and will continue to attract more new players.
Central Bank Digital Currencies (CBDCs) will also impact the market. They share similar characteristics with stablecoins and may drive the adoption of digital payment systems. Their centralized nature may lead users to prefer decentralized stablecoins for privacy and autonomy. Meanwhile, some may prefer them. Ripple is well-known for a reason, right?
Another trend worth noting is the increasing integration of crypto payments into traditional payment networks. We have already seen companies like Visa and Mastercard begin collaborating with crypto companies. These partnerships aim to provide users with crypto-supported cards, making the use of digital assets in everyday transactions simpler.
Today, more and more people see why we need cryptocurrencies. Governments and large institutions are also publicly acknowledging this and are pushing for their adoption. As we move forward, the industry will continue to adapt, offering faster, cheaper, and safer payment options. In this landscape, stablecoins will remain at the forefront, providing the foundation for new applications and integrations.
Views from: Arthur Azizov, CEO of B2BINPAY
Related: Bitcoin (BTC) price shows a "40% discount," while weekly purchases of Bitcoin spot ETFs soar to $3 billion
This article is for general informational purposes only and should not be considered legal or investment advice. The views, opinions, and opinions expressed in this article are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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