Study Uncovers Surprising Data: 90% Of Stablecoin Transactions Not Driven By Human Users

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As a researcher with experience in the fintech and blockchain space, I find the recent Bloomberg report on stablecoin transaction volumes to be both intriguing and concerning. The revelation that over 90% of stablecoin transactions do not originate from genuine users is a significant finding that challenges the optimistic outlook of stablecoin proponents.

According to a recent Bloomberg report, over 90% of transactions involving stablecoins are estimated to be made by non-user entities based on a new metric created in collaboration between Visa and other unspecified parties.

Stablecoin Market Faces Data Reality

As an analyst, I would interpret the information provided as follows: In collaboration with Allium Labs, Visa has developed a sophisticated dashboard to distinguish human-initiated transactions from those generated by bots and major traders. Out of the impressive $2.2 trillion transaction volume recorded in April, a relatively small portion, amounting to $149 billion, was classified as “organic payments activity” by Visa.

The data casts doubt on the sanguine perspective of stablecoin advocates, who assume that these digital currencies will revolutionize the $150 trillion payments sector.

Fintech companies like PayPal and Stripe are actively investigating the use of stablecoins. John Collison, Stripe’s co-founder, has shown optimism towards these digital currencies, attributing his positive outlook to recent technological advancements.

“I, Pranav Sood, the executive general manager for EMEA at payments platform Airwallex, observe that stablecoins are currently in their infancy as a form of payment instrument based on these findings.”

Sood highlighted the importance of enhancing current payment structures in the near and intermediate future. At the same time, he recognized the significant prospects of stablecoins in the long run.

Determining the true value of crypto activities based on blockchain data has consistently proven to be a complex task. For instance, Glassnode, a reputable data provider, approximated that the staggering $3 trillion worth of digital tokens assigned during the bull market’s peak in 2021 was more likely around $875 billion in actual value.

Analysts Predict Massive Surge Ahead

Bloomberg points out that the way stablecoin transactions are handled can sometimes result in a double-counting issue, depending on the specific platform used for transferring funds. To illustrate this, let’s consider an example: converting $100 worth of Circle’s USDC stablecoin into PayPal’s PYUSD on the decentralized exchange (DEX) Uniswap. This single transaction would result in a total recorded stablecoin volume of $200 on the blockchain.

Last year, Visa handled transactions amounting to over $12 trillion. However, if stablecoins become widely used for payments, Visa’s processing volume could be impacted.

As a analyst, I find it intriguing that even with concerning data, Bernstein’s team anticipates a significant increase in the total value of stablecoins in circulation. By 2028, they estimate this figure could reach an astonishing $2.8 trillion – a nearly eighteen-fold hike from their current combined market value.

Airwallex has noticed that their clientele has shown little interest in stablecoin-based payment solutions compared to PayPal and Stripe. This is mainly because of concerns regarding the user experience and ease of use.

Sood underscored the substantial challenge of replacing deeply ingrained payment systems, noting that up to half of all business transactions in the US still involve writing checks.

According to a recent Bloomberg analysis, non-legitimate user actions significantly impact stablecoin transactions. This revelation highlights the necessity of upgrading current payment systems and addressing user experience issues to fully realize stablecoins’ future capabilities.

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2024-05-06 17:10