Stablecoins, CBDCs Will Boost the Usage of Bitcoin (BTC) & Crypto 14

Stablecoins, CBDCs Will Boost the Usage of Bitcoin (BTC) & Crypto

Quick take:

  • Global Central Banks are embracing the idea of creating and using digital currencies. 
  • At the same time, the usage of Stablecoins is increasing as many traders use them to transfer value in the crypto ecosystem.
  • CBDCs and Stablecoins will most likely provide a gateway for new users to experience and invest in Bitcoin (BTC) and other digital assets. 

There is a wave in the traditional financial space of global Central Banks exploring the use of Digital Currencies. At the time of writing this, some of the countries and regions exploring the use of Central Bank Digital Currencies include China, England, Japan, Euro Zone, Sweden and Switzerland. Additionally, the US is also inching closer towards a Digital Dollar as concern grows that China’s Digital Yuan will become dominant in emerging markets and international trade.

More CBDCs Will Be Launched in the Next Year

It is with this background that, Mati Greenspan, a popular Financial Markets and Crypto Analyst, predicted that by this time next year all central banks will have some form of digital money. Mr. Greenspan made this prediction via the following Tweet.

The Use of StableCoins Continues to Increase

At the same time, the use of Stablecoins has seen a sharp increment in 2020 where the supply doubled from $6 Billion to $12 Billion in a period of around 4 months. This rapid increment was analyzed by the team at CoinMetrics who concluded that users of stablecoins are perhaps using them as fiat onramps. Another use of stablecoins has been in global remittances and cross-border payments. They explained:

[S]tablecoins can serve as replacements for fiat onramps and provide liquidity for crypto investors who do not have a direct fiat gateway. This is especially important in countries that have relatively strict restrictions on cryptoasset trading, like China. Past research has shown that USDT_ETH is predominantly transferred during Asian and European market hours.

Another possibility is that stablecoins are increasingly being used as a medium of exchange. Global remittances and cross-border payments are a natural use case for stablecoins given their ease of international transfer. Perhaps these types of payments are increasing due to hyperinflation in many fiat currencies following the March 12th crash.

CBDCs and Stablecoins Will Boost the Usage of Bitcoin (BTC) and Crypto

In their conclusion regarding the use of stablecoins, the team at CoinMetrics stated that stablecoins will likely help introduce more users into crypto and boost the adoption of digital assets such as Bitcoin.

But overall, as stablecoins continue to rise, they will likely help introduce more new users into the crypto ecosystem. Stablecoins could be the gateway that helps spur crypto’s global adoption and boost usage of BTC and other cryptoassets along the way

This conclusion is very similar to one made by the team at Grayscale in their analysis of the impact of CBDCs on Bitcoin and digital assets.

…if CBDCs are successfully launched, the infrastructure and education that would accompany the use of these bearer assets could serve as a gateway for further adoption of Bitcoin and other digital currencies.

Moving fiat currencies to digital infrastructure would highlight that Bitcoin is special not because it is digital, but because Bitcoin is a scarce, uncompromising, apolitical currency that is open for anyone to use.