In the near future, stablecoins such as StableUSD will affect a much larger market segment than they currently do. Currently, the average stablecoin user is a cryptocurrency investor looking to reduce exposure in a highly volatile market.
Yet, one of the largest and most immediate needs being addressed by blockchain and stablecoins is financial inclusion. These technologies bring new financial opportunities to the world’s unbanked people.
The Federal Deposit Insurance Corporation reported that about 7 percent of households in the U.S. are considered “unbanked.” This means that they don’t have a checking or savings account at a financial institution. In many cases, unbanked consumers are unable to open a bank account if they have a negative financial history, such as bounced checks or excessive account overdrafts.
Not having enough money for a bank account is also a reason many are unbanked. Oftentimes individuals can’t qualify for certain bank accounts that require a minimum monetary maintenance balance. In emerging and developing markets many people lack sufficient identification or documentation to open up a bank account. Without ID or any type of credit history, the unbanked are left with few options.
Blockchain technology and stablecoins are going change all this. Allowing anyone who has access to a mobile phone to create a digital wallet, which functions as a feeless bank account can instantly open up payment options and loan availability that were previously unavailable. Funds will be able to be transferred instantly and will avoid most of the fees banks charge, especially for cross border payments. A unique blockchain address will allow users to instantly create a digital identity published on the blockchain. This digital identity allows for a quick credit history to be built up and loans can be given based on the transaction and credit history of this individual. The lender will not have to worry about fraud as the blockchain is immutable and transparent to everyone in the network.
Instead of storing the value in volatile cryptocurrencies like Bitcoin or Ether, stablecoins will be the store of value these digital banks use. A fluctuating currency would make it almost impossible for consumers to budget out their purchases both large and small. Wondering if your Bitcoin balance will still be valued enough to pay the rent this month is not a feasible way to protect your finances. A stablecoin such as StablyUSD is the answer.
For developing markets and countries even those who are banked will turn to stablecoins as a solution for digital money. People in a country with high inflation or hyperinflation (as Venezuela’s inflation reached over 25,000% .) This means that individuals who have their money in that currency are watching their spending power decrease by the day. They are tied to their country’s currency and as it loses value so does their ability to purchase necessary goods and services. Citizens who are dealing with a high inflation currency will turn to stablecoins to preserve their wealth. By electing a stablecoin like StableUSD, which is pegged and backed by a tier-one currency, they can safely and securely preserve their value from wherever they are located.