- Stablecoins eliminate price volatility risks in payment transactions
- Developed by respected crypto-exchanges Gemini and Circle
- No supported bank accounts required
BitPay, the blockchain-powered international money transfer processor, has this week announced a new, secure, stablecoin settlement solution in a move to expand its user base and compete more keenly against fiat currencies.
The announcement was made on the company blog, launching a new means for BitPay merchants to receive settlements for Bitcoin Cash payments in the form Gemini Dollars (GUSD) and Circle USDS Coin (USDC). Both are ‘stablecoins’, digital tokens that have none of the volatility associated with many cryptos, and were developed by the regulated cryptocurrency exchanges Gemini and Circle to represent real US dollars on blockchains.
The blog states: “The value of each of these coins is pegged to the value of the US dollar at a 1:1 ratio, so there's no risk of value change or price volatility for holders. Holders can redeem these 'stable coins' directly for US dollars via Gemini (for GUSD) or Circle (for USDC) exchange accounts.”
Until now, BitPay merchants without supported bank accounts, like many in emerging markets such as South America and Asia, were only able to receive settled money transfer online transactions in the form of Bitcoin or Bitcoin Cash. Both are good options for merchants wishing to send money abroad swiftly, but they carry a risk of price volatility, a characteristic that can be difficult for businesses lacking reliable access to cryptocurrency exchanges.
GUSD and USDC, however, exist as US dollar-pegged, stable tokens on borderless blockchains, meaning that businesses can send money abroad to any BitPay merchant anywhere in the world, even to those who don’t have supported bank accounts, with zero price volatility risk.
If there are price fluctuations in these tokens, they’re similar to those of fiat currencies, as they happen within much more manageable ranges. Essentially, the 1:1 pegging of both GUSD and USDC tokens with the US dollar means that whenever the latter is strong, so are the former.
Merchants can make rapid cross-border payments using these tokens without the high costs and delays associated with bank wire transfers. With BitPay, not only will merchants experience dramatically less friction, cost and time for their international money transfers, they’ll enjoy highly accurate settlements too.
By contrast with the frustratingly laborious, complicated and costly bank wire alternative, blockchain technology ensures transparent, fast transactions that strengthen peer-to-peer relations between sender and receiver. Currently, BitPay is serving more than 190 countries and merchants in all of them can benefit from the new offering.
Welcome though this development undoubtedly is for a multitude of BitPay users, the firm still faces keen competition from rival digital payments platforms. Ripple Labs, for example, recently launched its own cross border payments platform, xRapid, which also eliminates the need for nostro bank accounts, as well as facilitating rapid transactions at low cost.
BitPay has made access to the new stablecoins as simple as possible. All merchants require is a wallet that’s compatible with ERC20 tokens and following four easy steps in their BitPay accounts to get started.
The company blog concludes: “We are excited to open up this new settlement option to BitPay's merchants around the world. This is just another way that blockchain technology is making payments work better and faster in a global marketplace.”
If you’ve enjoyed reading about BitPay, who may wish to read our recent article here.
