Stablecoins modernize international payments and enhance financial inclusion

In 2021, fintech investments surged globally, totaling around $229 billion. However, recent higher interest rates and stricter economic conditions have slowed this growth. Still, many investors believe the fintech sector will rebound in 2025, as the international finance system needs urgent modernization. Current systems, such as SWIFT, which has been around since 1973, are outdated. SWIFT primarily serves as a messaging platform for banks but was not built for managing funds or processing transactions. This has led to delays, high fees, and restricted choices for businesses and individuals, particularly those in developing regions where access to traditional banking is limited. Stablecoins, a type of blockchain-based currency, could address many of these issues. They allow for quick and easy money transfers across borders, potentially acting like digital versions of traditional currencies. For people in unstable economic situations, stablecoins provide a safe alternative that protects against inflation and currency loss. These digital currencies can also help small businesses by lowering the cost and complexity of international payments. For instance, payroll companies can pay freelancers more easily through stablecoins, enabling fairer competition in the global marketplace. Moreover, stablecoins offer financial services to the unbanked and underbanked populations, particularly in areas with limited financial infrastructure. They are becoming increasingly popular in emerging markets, used for things like remittances and everyday transactions. As of now, stablecoins have a market capitalization of over $233 billion, and their transaction volumes surpassed those of Visa in 2024. Their growth reflects a movement towards low-cost, fast, and reliable money transfers, making them key players in the future of global finance.