The famous crypto exchange Coinbase, in collaboration with The Block Research, has drafted a report entitled “The State of Crypto: Fairer, Cheaper, Faster Everyday Finance”, which highlights the advantages and benefits of payment systems in digital currencies that implement blockchain technology.
These advantages become more tangible if we take countries with struggling monetary economies like Argentina and Nigeria as case studies, where the use of stablecoins and cryptocurrencies can greatly facilitate the daily lives of average citizens.
Let’s see below all the details.
Coinbase Report: the crypto exchange highlights the potential of blockchain in the world of digital payments
Coinbase, one of the largest crypto exchanges in the world, recently published a report together with the research firm The Block, in which they illustrate the potential inherent in the world of cryptographic payments through the use of blockchain technology blockchain.
The study begins by highlighting three key characteristics of cryptocurrencies that could drive an increase in the adoption of virtual currencies worldwide, namely cost-effectiveness, speed, and accessibility.
Through a sampling survey that questions American citizens about traditional payment methods, Coinbase and The Block have identified a strong desire for innovation among the respondents, with 71% of consumers wanting to benefit from cheaper transactions, 70% wanting faster processes, and 63% wanting better access.
A 2020 survey by Deloitte revealed that payroll processing for workers in the United States takes an average of 3 to 6 days to complete, with over 30% of respondents reporting wait times exceeding 6 days.
Even international electronic payment circuits like Visa and Mastercard show shortcomings in transaction efficiency, with significantly high commission costs.
As explained by Coinbase exchange in the report, the use of blockchain can offer a great advantage in this context, providing fast and cost-effective transactions.
The crypto market, unlike the forex or stock market, is open 24 hours a day, so even a payment made on a holiday arrives at its destination in a few minutes/seconds depending on the cryptographic network being used.
The commission costs are definitely lower, with the only major barrier being the Ethereum blockchain, which in case of network congestion can present excessive costs (new updates like Dencun should make the network more economical).
However, the study shows how overall crypto payments are 5,000 times cheaper and 432,000 times faster than conventional methods.
For example, while bank transfer payments can incur fees of up to 50 dollars, some blockchain networks optimize fees to less than 0.01 dollars.
All this without even considering the usefulness of the new applications that have emerged in recent years in the field of decentralized finance, through which lending money has become more accessible to the middle class, further democratizing access to financial services.
On average, the processing of DeFi loans exceeds traditional banking by 144 times.
The case studies of Argentina and Nigeria: devaluation of fiat currencies, trading activities, and stablecoin
The advantages in the world of blockchain payments, as illustrated by the report of the crypto exchange Coinbase, are even more evident when comparing the potential of this technology to the current financial systems of economically troubled countries like Argentina and Nigeria.
Unfortunately, these nations have been exploited by the last ruling political classes, who through corruption and illegal activities have greatly impoverished their own fiat currencies which are now at a clear disadvantage compared to “solid” currencies such as the euro, the dollar or the yen.
Do you think that in the last 5 years the Argentine Peso has lost over 95% of its value against the euro, while the Nigerian Naira, in comparison, has recorded a -75%.
Cryptocurrencies and blockchain in these countries are not seen as a means to get rich or optimize their resources, but rather as a useful tool for survival.
In the Coinbase exchange report, we can observe how the use of trading activities on CEX has increased enormously in parallel with the devaluation of the Argentine ARS.
It is worth noting how crypto users have doubled from September to October 2023, precisely in conjunction with one of the most violent Peso dumps.
Same goes for Nigeria, where a depreciation of the NGN currency is correlated with a boost in centralized trading activities. The data has increased dramatically since June 2023, just as the Naira halved its value in the international currency market.
In a financial framework as complex as that of these two countries, blockchain technology can be a real panacea to protect one’s savings.
More specifically, stablecoins with a value anchored to that of the dollar, which differ from traditional cryptocurrencies due to their lack of volatility, can help protect purchasing power without relying on Bitcoin and Ether, while also contributing to democratizing access to financial services.
Stablecoins like USDT, USDC, and DAI offer very convenient payment channels, with very interesting use cases in DeFi (with annualized yields that can sometimes reach +10%), and an unprecedented transaction execution speed.
The number of value transfers in stablecoin, for these reasons, is increasing year after year, pushing citizens around the world to consider an exposure to these particular instruments of the new cryptographic financial technology.