Could stablecoins eclipse Visa? Yes, according to a report by research firm Sacra. Zoom in on a cryptocurrency sector that’s exploding right now.
Stablecoins now rival Visa
Sacra report estimates that stablecoin payment volume is on track to overtake Visa in Q2 2024. The firm explains that there has been a breakthrough in this type of cryptocurrency in recent times, particularly for transiting large sums internationally.
Stablecoins have started to be used by startups, but also large institutions, again according to Sacra:
Today, all the major banks are working on using stablecoins for their internal payment channels. This is the case not only for Wells Fargo and JPMorgan Chase, but also for Visa and Mastercard. “
Stablecoins would have “extreme market adaptability” according to Sacra, making them particularly apt in the face of banking systems that are still subject to long validation times and high fees. Hence Sacra’s conclusion that the volume of stablecoins will overtake that of Visa by the end of June:
Second quarter 2024 stablecoin volume projection
Visa mitigates this projection
Cuy Sheffield, Visa’s head of cryptocurrencies, clarified the estimate:
“At first glance, it’s an interesting chart. But it doesn’t seem to tell the whole story. “
He points out that the data present on blockchains is more complex to analyze than Visa’s. For example, stablecoin transactions include bots, including arbitrage bots and liquidity provider bots. It is therefore not relevant to compare them with Visa transaction volumes.
“We believe that the programmability of transactions is what makes blockchains unique. That said, it’s difficult to compare these transactions with the kind of organic payments that are initiated by customers. “
In other words: there’s a lot of “noise” about blockchains, and it’s not appropriate to compare networks that operate very differently. According to an analytics tool developed by Visa, of the $2.2 billion in volume that stablecoins saw in April, only $149 million came from individuals.
90% of stablecoin transaction volume is therefore linked to bots or entities such as centralized platforms. The “organic” volume is therefore much lower.
Stablecoins are exploding right now
The fact remains that we can’t ignore the attraction that payment managers and banks have shown for stablecoins in recent months. PayPal has shown this with its PYUSD, and more recently, Stripe has opened up to USDC payments. Other major companies, including Sony last month, have also jumped into the fray.
The stablecoin market is currently worth $161 billion. By comparison, Bitcoin (BTC) alone is worth $1,271 billion.
