Stablecoins have emerged as the most successful application of blockchain technology, overshadowed by more prominent cryptocurrencies such as Bitcoin and Ethereum. In 2024, they reached a transaction volume of $15.6 trillion, surpassing traditional payment networks such as Visa. This development shows that stablecoins are not only used as speculative instruments, but have already established a firm place in the real world.
With a market capitalization of nearly $250 billion and more than 27 million active users worldwide, stablecoins have built a bridge between the traditional financial world and the decentralized Web3 universe. They offer fast, low-cost, and transparent transactions that work across borders without intermediaries. In doing so, they overcome the structural inefficiencies of traditional payment infrastructures.
Stablecoin transfer volume (Image: Glassnode)
What Are Stablecoins and How Do They Work?
Stablecoins are blockchain-based digital tokens whose value is pegged to stable assets such as the US dollar. There are four main categories:
Fiat-backed stablecoins are backed by real reserves, usually in the form of bank deposits or short-term US government bonds. They combine the stability of government currencies with the efficiency of blockchain. USDC from Circle and USDT from Tether are the best-known examples. This category dominates with over 94% market share.
Crypto-backed stablecoins such as DAI or USDS are based on on-chain credit systems. Users deposit crypto assets as collateral to generate stablecoins. These systems are decentralized, transparent, and auditable, but carry risks in times of extreme market volatility.
Algorithmic stablecoins or “strategy-backed” tokens attempt to maintain a stable value through mathematical rules or investment strategies. However, due to past collapses, they are considered particularly risky.
CBDCs (Central Bank Digital Currencies) are government-issued digital currencies. They differ fundamentally from stablecoins in that they are centrally controlled and offer limited innovation. While stablecoins are open and permissionless, CBDCs are often restrictive and politically motivated.
Economic Relevance and Savings Potential
Stablecoins offer enormous savings for businesses and consumers. The example of Walmart clearly illustrates this: by replacing traditional credit card payments with stablecoins, the company could save billions in fees and significantly improve its net margin.
Transactions are no longer processed by four to five intermediaries with high costs and time delays, but directly and at virtually no cost. This speeds up international B2B payments in particular, which previously took several days and incurred high SWIFT or forex fees. Stablecoins enable transparent transactions in a matter of seconds.
Institutional Adaptation and Real-world Use Cases
Numerous companies have already integrated stablecoins into their operational processes. SpaceX uses them to repatriate capital from volatile currency markets. SAP is testing stablecoins as a new settlement method in global supply chains. Fintech giants such as Stripe and PayPal are responding by integrating stablecoin payments into their platforms.
These real-world applications show that stablecoins are no longer just a crypto experiment. They already form an essential infrastructure for global liquidity and digital payments.
Related article: Four major US banks want to form a consortium for a stablecoin project
Regulatory Framework and its Impact
In the EU, the MiCA regulation provides greater regulatory clarity. Although many stablecoins had to be delisted, the regulation has strengthened institutional investors’ confidence in regulated products such as USDC.
In the US, comprehensive legislation to regulate stablecoins is currently being prepared. The aim is to secure the US dollar as the dominant reserve currency in the digital world and to generate new demand for US government bonds through the issuance of stablecoins. This development could significantly strengthen the competitiveness of the US financial market in the digital age.
Technological Trends As Adoption Boosters
Two megatrends could cause stablecoin adoption to skyrocket:
First, the automatic integration of blockchain wallets into operating systems and apps. Once wallets no longer need to be actively downloaded and configured, the barrier to entry for billions of users will be lowered. Stablecoin payments could then become as easy as sending a message.
Second, the rise of agentic AI. These autonomous AI systems require digital means of payment that function around the clock on any scale. Only stablecoins enable transactions in the sub-cent range, as required for machine micropayments. The interaction of AI and programmable payments creates a new, fully automated economic layer.
Outlook and Conclusion
Stablecoins are more than a digital alternative to fiat money. They represent a new infrastructure for the global financial system – open, transparent, efficient, and programmable. The synergy of regulatory maturity, institutional acceptance, technological integration, and AI-driven use cases lays the foundation for a new era of financial innovation.
The key question is no longer whether stablecoins will prevail, but how quickly and to what extent they will displace or transform existing systems. Stablecoins are here to stay – as a bridge, foundation, and engine of the next financial revolution.
Author
Ed Prinz serves as Chairman of https://dltaustria.com, Austria’s most renowned non-profit organization specializing in blockchain technology. DLT Austria is actively involved in educating and promoting the value and applications of distributed ledger technology. This is done through educational events, meetups, workshops, and open discussion forums, all in voluntary collaboration with leading industry players.
Disclaimer
This is my personal opinion and not financial advice.
For this reason, I cannot guarantee the accuracy of the information in this article. If you are unsure, you should consult a qualified advisor whom you trust. This article does not make any guarantees or promises regarding profits. All statements in this and other articles are my personal opinion.