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Stripe’s Revives Crypto Payments with Stablecoin Integration

By Fhumulani Lukoto

After a hiatus from cryptocurrency payments, Stripe, the renowned online payment processing platform, has announced its re-entry into the crypto sphere.

Overview

This time, however, the company is taking a different approach by incorporating stablecoins into its payment infrastructure.

This move marks a significant shift in the company’s strategy, signalling a potential mainstream acceptance of stablecoins as a viable payment method.

Co-founder and president at Stripe, John Collison, suggested that the payment service is bringing back crypto in the form of stablecoin payments.

On April 25 2024, at the company’s developers conference in San Francisco, Collison emphasised that crypto is finally making sense as an exchange.

Stripe suggested that since it discounted the Bitcoin (BTC) payment option in 2018, transaction times have increased, fees have decreased, and stablecoins are performing stably.

In a chat about stablecoin value transferred, Collins said, “If we’re in a crypto winter post 2021, nobody told the stablecoins.”

He added, “We’re bringing back crypto as a way to accept payments, but this time with a much better experience with stablecoins.”

While on stage, Collison proved his point by carrying out a transaction. Stripe suggested that it will offer payment services using USD Coin on the Solana, Ethereum (ETH) and Polygon blockchains.

Before displaying a chart of stablecoin use versus the volume of Turkish lira traded across crypto exchanges, Collison highlighted that besides the stability found in USDC, its dollar peg makes it a store of value.

Collison said, “You don’t see it in the US. You have perfect currency.”

The Rise of Stablecoins

Stablecoins have gained traction recently as a reliable alternative to traditional cryptocurrencies like BTC and ETH.

Unlike their volatile counterparts, stablecoins are pegged to fiat currencies or other assets, ensuring price stability and reducing the risk linked with price fluctuations.

This stability makes them appealing for everyday transactions, as users can confidently transact without worrying about sudden value swings. One of the key advantages of stablecoins is their ability to facilitate fast and inexpensive cross-border transactions.

By leveraging blockchain technology, stablecoin transactions can be executed almost instantaneously, eliminating the need for intermediaries and reducing transaction fees.

This makes stablecoins an appealing option for businesses operating in the global marketplace, as they can streamline payment processes and reduce overhead costs.

Furthermore, stablecoins offer transparency and durability inherent to blockchain technology. Each transaction is recorded on a distributed ledger, providing a tamper-proof record of all transactions.

This enhances security and enables greater accountability and auditability, which are essential for businesses operating in regulated industries.

Stripe’s Adoption of Stablecoins

Stripe’s decision to integrate stablecoins into its payment platform reflects a growing recognition of the potential benefits of these digital assets. In 2014, Stripe was the first significant payment provider to adopt BTC.

While explaining its discontinuation four years later, Collison said, “At the time, Bitcoin was a pretty terrible payment method.”

Stripe did not entirely turn its back on crypto. It participated in the Libra project before backing out under pressure from US politicians.

In 2021, it began rebuilding its crypto engineering team. By embracing stablecoins, Stripe aims to provide its users with a more efficient and cost-effective payment solution that aligns with the needs of today’s digital economy.

Using stablecoins also opens up new opportunities for Stripe to expand its market reach and attract a broader range of customers.

By offering a payment option combining the benefits of crypto with the stability of fiat currency, Stripe can appeal to businesses and consumers who may have hesitated to embrace traditional cryptocurrencies due to their volatility.

Additionally, Stripe’s adoption of stablecoins could have broader implications for the crypto market as a whole. By integrating stablecoins into its platform, Stripe is effectively endorsing these digital assets as a legitimate form of payment.

This could further legitimise the crypto industry in the eyes of mainstream consumers and businesses.

In 2022, Stripe and X introduced a program to allow creators on the social platform to receive payment in USDC on Polygon, which resulted in Stripe being the payment processor for payouts on X.

Stripe also created fiat-to-crypto on-ramps through application programming interfaces (APIs) in conjunction with crypto exchanges.

Experts at Bitcoin Synergy mentioned that in May 2023, Stripe launched a fiat-to-crypto on-ramp in the US, which allowed Web3 companies to offer customers the ability to purchase crypto without the need to embed any code into a website or app.

Stripe’s decision to reintroduce cryptocurrency payments, this time focusing on stablecoins, marks a significant milestone in the evolution of the digital payments landscape.

By embracing stablecoins, Stripe is not only providing its users with a more efficient and cost-effective payment solution but also helping to pave the way for greater adoption of cryptocurrency in the mainstream.

As stablecoins continue to gain momentum, we’ll likely see more companies following in Stripe’s footsteps, further blurring the lines between traditional finance and the world of cryptocurrencies.

Main image by Kanchanara on Unsplash

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