As a seasoned analyst with extensive experience in the crypto space, I have witnessed the evolution of digital assets from a niche market to a global phenomenon. The report by Castle Island Ventures, sponsored by Visa, sheds new light on the diverse and expanding use cases of stablecoins, particularly in developing countries.
As a researcher, I’ve been pondering about the perception that stablecoins serve primarily as tools for anonymous cryptocurrency transactions. However, recent findings from Castle Island Ventures’ survey seem to challenge this notion.
According to a study funded by Visa, it was demonstrated that individuals in five emerging nations – Nigeria, India, Indonesia, Turkey, and Brazil – are increasingly adopting stablecoins primarily for transactions and as a form of digital saving tools.
Stablecoins: Crypto’s Killer Use Case
As a researcher, I recently conducted a study surveying a diverse group of 2541 cryptocurrency users from various nations. Interestingly, I discovered that among these participants, half (approximately 50%) utilize stablecoins primarily for trading purposes – making it the most prevalent application of these digital assets within our sample group.
In my exploration of various scenarios, I found that saving money in U.S. dollars was the second most frequently mentioned reason, accounting for approximately 47%. Interestingly, this was the primary motivation among users in Nigeria. Additionally, many were keen on obtaining favorable exchange rates for different currencies (43%), capitalizing on DeFi returns (44%), and converting their local currency to U.S. dollars (also 43%).
The majority of the stablecoin market is dominated by cryptocurrencies that are pegged to the U.S. dollar, making up almost 99% of the market in terms of total value. Tether (USDT) stands out as the most popular choice, representing approximately two-thirds of the market on its own. Those who use Tether often cite its powerful network effects, user trust, abundant liquidity, and strong track record as reasons for their preference.
In these areas, Tether was the preferred stablecoin, but users of stablecoins showed a preference for Ethereum blockchain, even though it’s one of the pricier options compared to alternatives such as Solana and Tron. The most commonly used non-custodial wallets were Trust Wallet, MetaMask, and Coinbase Wallet; however, about half of the respondents admitted to using Binance‘s centralized exchange as their primary wallet in essence.
Approximately half of the surveyed individuals are investing a substantial portion of their portfolio in stablecoins, with around 55% reporting that more than 10% of their holdings consists of these tokens. Interestingly, about 8% of respondents have as much as half of their assets invested in stablecoins.
According to the report, the adoption of stablecoins has been on an upward trend across all surveyed nations. Most respondents stated that they have increased their use over the past year, while a substantial number also plan to boost their usage in the following year.
Nigeria’s Love For Crypto
Among the nations surveyed, all of them ranked within the top 15 for cryptocurrency adoption, yet it’s important to note that stablecoin adoption exhibited a particularly strong presence across all metrics in Nigeria.
In terms of their investment portfolios, it’s found that nearly three out of four Nigerians kept over a tenth of their wealth in stable assets. They were also the group with the largest percentage of non-cryptocurrency uses for these stable assets and reported the highest level of understanding about such digital tokens.
Overall, 87% of those surveyed said they had a favorable opinion of stablecoins.
According to Nic Carter, General Partner at Castle Island Ventures, it’s quite possible that we’re currently witnessing a “crypto-dollarization” incident taking place in Nigeria. This is happening despite the government’s opposition towards it, as he stated on Twitter.
Users are eager for digital versions of U.S. dollars, and it seems inevitable that other currencies will be replaced by them, the individual pointed out.
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2024-09-14 17:36