28 July 2023

How Stablecoins Can Fuel the Next Payment Infrastructure

Explore NOAH Business, a pioneer in fintech, using stablecoins to transform the digital economy. See how stablecoins combine fiat stability with digital perks for new financial possibilities. Discover NOAH's use of stablecoins for change, inclusion, and payment revolution. Unveil stablecoins' broader financial impact.

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How Stablecoins Can Fuel the Next Payment Infrastructure

    Index

    Anatomy of Traditional Payment Systems: Highlighting the Shortcomings
    Stablecoins: Pioneering a Revolution in Payments
    Expansive Role of Stablecoins: Beyond a Digital Currency
    Challenges and Prospective Directions
    Conclusion

As a trailblazer in the financial technology arena, NOAH Business is harnessing the disruptive power of stablecoins to reshape the contours of the digital economy. Stablecoins —cryptocurrencies engineered to minimize price volatility — serve as an innovative medium that synthesizes the robustness of traditional fiat currencies with the revolutionary advantages of digital currencies.

Unlike traditional cryptocurrencies, stablecoins are engineered to minimize price volatility by pegging their value to a reserve of stable assets such as a specific fiat currency (e.g., the U.S. Dollar). This stability in value positions stablecoins as a unique blend of traditional fiat currencies' stability and cryptocurrencies' digital, decentralized benefits. This fusion cements the role of stablecoins as a critical change-agent in ushering a new era of financial infrastructure. It is on this emergent front that NOAH Business is driving transformational change.

Anatomy of Traditional Payment Systems: Highlighting the Shortcomings

Widespread adoption does not shield incumbent payment systems from inherent limitations that directly undermine their efficiency and accessibility. These limitations manifest in various forms such as inflated transaction fees, protracted processing times, and restricted accessibility, especially in regions grappling with underdeveloped financial systems.

The complexity of cross-border transactions serves as a prime example of these challenges. Intermediaries, a common requirement in these transactions, pile on more layers of complexity, thereby driving up costs and extending processing times. Data from the World Bank accentuates this issue: in 2021, sending remittances globally cost an average of a staggering 6.5% of the transaction value. This prohibitive fee structure acts as a deterrent, hindering the active participation of certain demographics in the global economy.

Furthermore, a significant segment of the global population remains ignored by the traditional banking system, falling into the categories of unbanked or underbanked. This glaring reality highlights the urgent need for a financial system that is more inclusive, globally accessible, and efficient.

Stablecoins: Pioneering a Revolution in Payments

Recognizing the inherent problems plaguing traditional payment systems, NOAH Business is embracing the game-changing potential of stablecoins to architect a new order of global finance. By leveraging the unprecedented capabilities of blockchain technology, stablecoins promise an accessible, cost-efficient, and nimble payment ecosystem.

Stablecoins can potentially streamline the remittance process by reducing the reliance on intermediaries, thus facilitating faster, more cost-effective transactions on a global scale. The potential impact on international trade and remittances could be substantial. For instance, Filipino workers abroad sent home over $33 billion in 2021. Unlike traditional remittance services that often charge a percentage of the transferred amount (6.3% on average globally), stablecoin transactions typically involve a flat network fee, which is often negligible compared to the remittance size.

Assuming an average cost of $2 per transaction, even for large remittances, this represents a significant cost reduction compared to the usual remittance fees. In the case of the $33 billion sent by Filipino workers in 2021, if each remittance had a flat fee of $2 instead of the usual percentage-based fee — it could save Filipinos billions.

Stablecoins can also serve as a significant economic boon in regions where local currencies experience high volatility or depreciation. By offering a stable store of value and a reliable medium of exchange, they can help mitigate currency risks and foster economic stability.

Expansive Role of Stablecoins: Beyond a Digital Currency

NOAH Business envisions an expanded application for stablecoins that goes beyond their simple function as digital currency. The inherent programmability of stablecoins enables the implementation of smart contracts — these are self-executing contracts with the agreement terms written directly into lines of code. This capability opens up a wealth of opportunities within decentralized finance (DeFi), such as the creation of lending platforms, decentralized exchanges, prediction markets, and more. For example, NOAH Business actively develops a lending platform, using stablecoins to supply liquidity to underfunded sectors, thus narrowing the financial services gap.

Moreover, stablecoins hold the potential to integrate flawlessly with traditional payment systems. This integration can effectively bridge the gap between conventional finance and the swiftly progressing digital economy. Such a synergistic connection can enhance user experience, foster financial interoperability, and streamline interactions across varied payment methods and services.

Challenges and Prospective Directions

The trajectory towards the broad acceptance of stablecoins is laden with significant complexities. A prime hurdle lies in the yet unresolved regulatory landscape. Global financial regulators are actively engaged in the process of demarcating and imposing appropriate rules for these digital assets.

Moreover, issues concerning privacy, security, and consumer protection present considerable challenges. Establishing user confidence in stablecoin-based payment systems necessitates the adoption of rigorous data privacy practices, stringent security protocols, and comprehensive consumer protection frameworks. These measures are essential to safeguard against potential financial losses.

Undeterred by these complexities, NOAH Business remains resilient in its pursuits, continuing to propel technological advancements and amplify the advantages of stablecoins. Amid these challenges, NOAH Business persistently upholds its commitment to cultivate a more accessible, efficient, and forward-thinking financial ecosystem.

Conclusion

NOAH Business spearheads the transformation in the financial landscape, powered by the emergence of stablecoins. By capitalizing on the revolutionary potential of stablecoins, NOAH Business is proactively addressing the limitations inherent in traditional payment systems and charting novel courses within the financial sector.

As global acknowledgment of the value of stablecoins amplifies, the world stands on the brink of a monumental shift in financial transactions. This transition leans towards the creation of more inclusive, efficient, and innovative financial infrastructures. With a leading role in this significant shift, NOAH Business is not merely witnessing but actively driving this paradigm change, contributing to the shape of future advanced and seamless financial transactions. This case study provides an in-depth exploration of this transformative journey in financial technology.

Please be aware that: Cryptocurrencies are unregulated in the UK; Cryptocurrencies are not protected under Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS); Profits may be subject to capital gains tax; The value of investments can go down as well as up.

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