Can Stablecoins Boost Remittances? | Nasdaq

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Over the past decade, the global landscape for financial transactions has dramatically improved. Cashless payments have gained prominence through e-wallets, credit cards, and virtual credit cards. 

Meanwhile, traditional payment methods across borders have long been surrounded by issues related to high-flying fees and slow processing times. It is no wonder payments and remittances are witnessing a massive change as the digital revolution peaks. 

We don’t notice that the fintech revolution has already stretched further and faster than expected—thanks to the unstoppable boom in the cryptocurrency market. From the introduction of Bitcoin in 2009, cryptocurrencies started and proliferated in the following years. 

There are criticisms and controversies surrounding the market. Believers see cryptocurrencies as the digital stepping stone toward a decentralized financial system. But as of today, they have yet to fulfill their promise. Right now, they primarily serve as a type of investment, more volatile than a stock. Even so, they have started offering a new financial transaction method. 

Despite being relatively new to the market, one of the most popular examples is stablecoins. It has gained popularity in a very short period. Stablecoin holders view its usage for remittances as one of the most viable applications of cryptocurrencies. 

In this article, we will delve into the possibility of stablecoins reshaping the remittance industry. We will also explore how it can speed up cross-border transactions while expanding its presence to international markets. 

What makes stablecoins so important? 

Stablecoins are cryptocurrencies with a value pegged or tied to another currency, commodity, or financial instrument. It is similar to currency pegging in the Forex market, wherein a central bank sets a fixed exchange rate to which its domestic currency is pegged. 

So, the exchange rate becomes the value of the domestic currency compared to the pegged currency. Meanwhile, stablecoins can be pegged to various reference assets aside from currencies. These include exchange-traded commodities, gold, or another cryptocurrency. 

In theory, stablecoins can track the pegged asset’s value so it will not be subject to radical changes in the overall digital asset market….