Stablecoins and decentralized finance are emerging as important tools capable of changing the way transactions are conducted and access to credit in the global economy.
How Stablecoins Reduce Economic Friction?
Jamie Coutts, Chief Crypto Analyst at Real Vision, recently noted that stablecoins can eliminate trillions in economic friction currently weighing down global commerce. This reduction brings several benefits:
* Boosting Merchant Profit Margins: By cutting down on traditional payment processing fees, businesses can retain a larger portion of their sales. * Enabling New Value Transfers: Stablecoins facilitate micro-transactions and cross-border payments more efficiently and affordably than conventional methods. * Accelerating Monetary Circulation: Faster and cheaper transactions mean money moves through the economy more rapidly, stimulating economic activity.
How DeFi Sharpens Credit Costs?
Beyond stablecoins, the decentralized finance (DeFi) ecosystem is also emerging as a major disruptor, particularly in credit. Coutts emphasized that DeFi is set to significantly lower credit costs. For example, blockchain providers in the U.S. are now offering home equity lines of credit (HELOCs) at rates more than 1% cheaper than traditional financial institutions.
Impact of Reducing Financial Costs on the Global Economy?
The combined impact of stablecoins and DeFi is estimated to unlock up to a staggering $1 trillion in global economic value each year. This won't just save a few dollars; it could reshape the cost structure of global finance.
In conclusion, insights from Jamie Coutts emphasize a pivotal shift in the financial landscape. Stablecoins and DeFi are not merely niche technologies; they are powerful engines capable of transforming outdated financial structures.
