How Stablecoins Are Promoting Financial Inclusion in Underserved Regions

Source: Pexels

Stablecoins have created a new way of handling money that has provided numerous benefits for businesses and consumers alike. By focusing on underserved regions where banking services have traditionally been limited, we can see how this approach is helping boost financial inclusion.

What Are Stablecoins?

These are digital assets that have been designed to remove the volatility that we sometimes associate with crypto. This is done by pegging the value of each coin to a real-world asset, like the US dollar or the euro. As well as fiat currencies, it can be pegged to an asset like gold. The token is backed by physical reserves of the asset that it’s linked to, meaning that its value should remain stable and linked to the value of that asset at all times.

By combining price stability with the speed and security of the blockchain, stablecoins have provided a convenient way to send money across the planet without any risk of the price changing along the way. This makes them ideal as a sort of bridge between fiat currencies and cryptos, allowing people to move their cash quickly and safely over the blockchain.   

Tether (USDT), USD Coin (USDC), and Dai (DAI) are the biggest stablecoins by market capitalization just now, but new coins are added to the market regularly, giving additional options for anyone who wants the flexibility of stablecoins.  

An Easy Option for the Unbanked Population

The World Bank has estimated that around 1.4 billion people across the planet are unbanked and lack the opportunity to access basic financial services like accounts and debit cards. Cryptocurrencies have helped to change this by giving them simple access to a wide range of tokens. They also tend to be a low-cost way of moving money from one country to another, making them ideal for immigrant workers and others who want to send remittances to their loved ones in other countries. 

Stablecoins are particularly useful for international remittances or as a hedge against inflation in countries with volatile national currencies, such as Argentina, Turkey, and Venezuela at the time of writing. Some users choose to hold stablecoins as a store of value that doesn’t lose value like their country’s fiat currency, while others simply buy stablecoins when they need to make a payment using them.  

Their use cases have grown in recent years, as more people have realized that they provide a simple and very effective way to send money without the use of banks or other middlemen. By using a smartphone, anyone with internet access can send or receive stablecoins instantly anywhere in the world. This has removed the need to visit a bank branch or meet stringent regulations to open a traditional bank account. 

 

A Reliable Cross-Border Payment Option

Stablecoins also offer a reliable option for ecommerce businesses looking to accept cross-border payments more smoothly. They are efficient for companies and their clients alike, while the fact that unbanked customers can use them allows businesses to reach new markets where not everyone can open a standard bank account to make online payments. It means that the banking infrastructure is no longer an issue when deciding which countries to expand into.

Companies that want to expand by accepting orders from other countries and regions can do so by integrating a crypto payment gateway on their websites. This allows them to accept payments on a 24/7 basis, without borders or other issues getting in the way. Payment activity can be tracked in real-time, allowing businesses to keep a close eye on the money being sent to them.       

The rise of stablecoins as a new way of moving money easily across borders has opened up new possibilities for companies and customers who want to move money from one country to another without any worries. As demand continues to increase, we can look forward to seeing an even wider range of these digital assets being offered in the future.