Stablecoins, digital assets that operate on blockchain networks and whose value is linked to fiat currencies such as the dollar, have emerged as one of the most disruptive tools in the cryptocurrency space.
With over $160.000 billion in circulation and transaction volume reaching $2,6 trillion in the first half of 2024, stablecoin adoption is transcending speculation, becoming part of the daily economy of millions of users around the world.
Un report A recent report published by Castle Island Ventures, in collaboration with Brevan Howard, Visa and Artemis, highlights the important role that stablecoins are gaining in emerging economies such as Brazil, Nigeria, Turkey, Indonesia and India. According to the report, these countries are adopting these digital currencies, especially those based on the Ethereum blockchain, as a viable solution to overcome local economic challenges.
Brazil seeks stability of stablecoins
One of the main characteristics of stablecoins is that, as their name suggests, they are able to maintain a stable value. Therefore, although they are digital currencies based on a blockchain, they move away from the typical volatility of cryptocurrencies, providing users with stability and confidence.
In the case of Brazil, where inflation and economic instability have been constant concerns, the report highlights that stablecoins have become a crucial tool for the Savings protection and currency conversion.
According to the data, 44% of cryptocurrency users in Brazil use stablecoins primarily as a substitute for their local currency, the real, due to the depreciation of this fiat currency and the lack of trust in the traditional banking system. The firms stressed that Brazilians are choosing to keep their savings in dollars through stablecoins, thanks to the fact that these digital currencies are able to provide them with greater security and stability compared to their local currency.
In addition, access to financial services through stablecoins, mainly those based on the Ethereum network, allows Brazilians to participate in international trade and make cross-border payments more efficiently.
As stablecoins facilitate these possibilities, the report suggests that adoption of these digital currencies will expand even further, boosting financial inclusion in Brazil and other countries where many people still lack access to conventional banking services.
Stablecoins as a solution to Nigeria's monetary crisis
Nigeria, one of the most populous countries in Africa, faces significant economic challenges, including high inflation and limited access to foreign currency. Against this backdrop, stablecoins have emerged as an attractive alternative for Nigerians looking to protect their purchasing power. A whopping 64% of respondents in Nigeria cited the Savings in dollars as their main goal when using stablecoins, followed by Trading in cryptocurrencies and NFT tokens and currency conversion.
In addition to these primary uses, stablecoins in Nigeria also allow users to access the crypto economy, make payments for goods and services, and conduct remittance transfers. Currently, stablecoins have allowed Nigerians to bypass foreign exchange restrictions and access a form of money that is more reliable and stable than the naira, their local currency.
Türkiye: A haven against inflation
Stablecoins have been well received in Turkey, mainly because they represent an alternative solution to deal with inflation that has reached alarming levels in the country.
According to the report, many citizens have turned to stablecoins to facilitate Fast and cheap transactions and get better returns through decentralized finance (DeFi) platforms. These digital currencies are allowing Turks to access returns that they would not be able to obtain through traditional financial channels, which not only improves the financial situation of users but also fosters a more dynamic and accessible financial ecosystem.
55% of stablecoin users in Turkey revealed that they used these digital currencies to access DeFi, while 51% cited cryptocurrency and NFT trading as their primary stablecoin use case.
Stablecoins are part of the financial future in Indonesia and India
Indonesia and India, two economic giants in Asia, are also experiencing a boom in stablecoin adoption. In these countries, respondents said the main reasons for using stablecoins were the efficient currency conversion and the trading and exchanging with other digital assets.
Thus, as the report noted, stablecoins are beginning to play a crucial role in the global economy and markets.
The transformative potential of stablecoins in the financial market
Beyond transforming the way people interact with money and transact, stablecoins also have the potential to transform the global financial system. These stablecoins can offer a viable alternative to fiat currencies, opening up new opportunities for savings, investment, and trading. Furthermore, as the report’s findings showed, they have the ability to provide returns through DeFi platforms, which is attracting users looking to maximize their capital.
The growing adoption of stablecoins in Brazil, Nigeria, Turkey, Indonesia and India reflects a significant shift in the way people in emerging economies manage their money and also raises concerns about the regulation of these digital assets.
However, as more users realize the advantages and potential of these digital currencies, their impact is likely to continue to expand, transforming the economies of millions of people around the world.
