The global [payment](https://inleo.io/@leoglossary/leoglossary-payment) [market](https://inleo.io/@leoglossary/leoglossary-market) is enormous.  It is estimated to be $2 [quadrillion](https://inleo.io/@leoglossary/leoglossary-quadrillion).  This is roughly 20 times the amount of [goods](https://inleo.io/@leoglossary/leoglossary-goods-economic) and services produced by the [world](https://inleo.io/@leoglossary/leoglossary-world) [economy](https://inleo.io/@leoglossary/leoglossary-economy).


It is why there are so many big players interested in the market.  With that type of [volume](https://inleo.io/@leoglossary/leoglossary-volume), even getting a small slice can result in some big numbers.


To achieve this end, a vast array of [computer](https://inleo.io/@leoglossary/leoglossary-computer) [networks](https://inleo.io/@leoglossary/leoglossary-network) were set up, all designed to move [data](https://inleo.io/@leoglossary/leoglossary-data) around at very high speeds.  In this instance, the data reflects [currency](https://inleo.io/@leoglossary/leoglossary-currency).


[Cryptocurrency](https://inleo.io/@leoglossary/cryptocurrency) had its eyes set on this market from the start.  The idea of making payments using a [digital](https://inleo.io/@leoglossary/leoglossary-digital) [wallet](https://inleo.io/@leoglossary/leoglossary-wallet) is nothing new.  In fact, that is the entire premise behind [PayPal](https://inleo.io/@leoglossary/leoglossary-paypal).  However, crypto tied to a [public blockchain](https://inleo.io/@leoglossary/leoglossary-public-blockchain) adds in the element of [decentralization](https://inleo.io/@leoglossary/leoglossary-decentralization).  This removes [counterparties](https://inleo.io/@leoglossary/leoglossary-counterparty) from the equation.


In this instance, they can also be called rent seekers.


# Stablecoins Are The First Major Use Case For Crypto


The early [Bitcoin](https://inleo.io/@leoglossary/leoglossary-bitcoin) adopters believed this would serve as the replacement for the [US Dollar](https://inleo.io/@leoglossary/leoglossary-u-s-dollar) and offer the world a decentralized [medium of exchange](https://inleo.io/@leoglossary/leoglossary-medium-of-exchange).


There are a couple problems with this outlook.


First, stability is required if something is going to be a successful medium of exchange.  Bitcoin does not quality.  It is highly volatile, something that will always be present due to its fixed nature.


The other is the fact the network is inefficient.  When looking at processing trillions of [transactions](https://inleo.io/@leoglossary/leoglossary-transaction), this is a problem. 


Bitcoin provided the world with decentralized [consensus](https://inleo.io/@leoglossary/leoglossary-consensus), something it had not seen before in the digital realm, at least when it came to [money](https://inleo.io/@leoglossary/leoglossary-money).  The problem is the inefficiency of the network.


This solution is to move the payment layer off the base, to a secondary [network](https://inleo.io/@leoglossary/leoglossary-network-broadcast).  It is the idea behind the [Lightning Network](https://inleo.io/@leoglossary/leoglossary-lightning-network).  The challenge here is the lack of incentivization for the [node](https://inleo.io/@leoglossary/leoglossary-node) operators.  This ultimately will force other forms of [monetization](https://inleo.io/@leoglossary/leoglossary-monetization), adding the counterparty right back in.


Fortunately, we do see the potential of stablecoins.  Diving into this could be a series of [articles](https://inleo.io/@leoglossary/leoglossary-article) on its own.  For nOW, the main point is these [tokens](https://inleo.io/@leoglossary/leoglossary-token) use a [peg](https://inleo.io/@leoglossary/leoglossary-peg), mostly to the [USD](https://inleo.io/@leoglossary/leoglossary-usd), to achieve [price stability](https://inleo.io/@leoglossary/leoglossary-price-stability).


Here is where we see cryptocurrency offering up a valid medium of exchange.


# Ethereum Leading The Way


When we look at the stablecoin market, it all starts with [Ethereum](https://inleo.io/@leoglossary/leoglossary-ethereum-blockchain).  This has the most [coins](https://inleo.io/@leoglossary/leoglossary-coins) on it, hence is still the leader.


That said, it is not the only game in [town](https://inleo.io/@leoglossary/leoglossary-town) and, the numbers we will discuss are likely vastly underestimated at this point.


Nevertheless, here is a chart of the stablecoin volume on that [blockchain](https://inleo.io/@leoglossary/blockchain).  Keep in mind this is Ethereum only.


https://img.inleo.io/DQmXJd6pDTSn3FZyd4GfMC3Zw4PbESAbiWkBcVWxBfu4DBQ/stablecoins.png 
[Source](https://www.theblock.co/data/stablecoins/usd-pegged/adjusted-on-chain-volume-of-stablecoins-monthly)


As we can see the trend if heading up.  We saw a big jump in April, followed by a couple [months](https://inleo.io/@leoglossary/leoglossary-month) of decline.  That said, June will likely end up as the 3rd or 4th largest month ever, all achieved since March of this [year](https://inleo.io/@leoglossary/leoglossary-year). 


If we look back to the end of Summer and Fall of 2023, we see a significant increase.


Why is this a positive outlook?


The main utility of stablecoins is payments.  That is what they are most designed for.  They are not speculative [assets](https://inleo.io/@leoglossary/leoglossary-asset) since they focus upon stability.  In this case, [volatility](https://inleo.io/@leoglossary/leoglossary-volatility) is the enemy.


## Collective Growth


Ethereum is just one player in this emerging field.  Most networks are finding they are able to incorporate stablecoins in some form.


This starts with the EVMs, which are [forks](https://inleo.io/@leoglossary/leoglossary-fork) of the Ethereum chain.  Leading the way in payments here is [TRON](https://inleo.io/@leoglossary/leoglossary-tron), which [had $1.2 trillion in volume in the 4th quarter](https://cointelegraph.com/news/tron-poised-leading-role-stablecoin-payments-tokenization).  That is an average of $400 billion per month.  This significantly adds to the totals on Ethereum.


 https://img.inleo.io/DQmXQp7zizeSQD8AvKPKMjbH4QfzehM5hS9Ry5QR9c3AnX8/image.png 
Wikipedia image


One of the keys going forward will be the power distribution curve, also know as the long tail theory.


The basic idea is that, in the digital realm, while there are a few dominant players, the totality of activity is enhanced by all the entire curve.  Due to low [costs](https://inleo.io/@leoglossary/leoglossary-cost), a handful of transactions, in this instance, are possible.


Basically, we are looking at the potential of hundreds of different [stablecoins](https://inleo.io/@leoglossary/leoglossary-stablecoin), all garnering market share.  While most will have very low volume, it will have an impact.


This is an important [feature](https://inleo.io/@leoglossary/leoglossary-feature) since smaller networks could easily double their volume.  When this happens in many instances, the total effect is felt.  Of course, it is magnified is some do a 10x or 20x their present volume, say over the course of a year.  


It is the type of growth the present system is not going to see.


Ultimately, this boils down to the [network effects](https://inleo.io/@leoglossary/leoglossary-network-effect).  


With crypto, there are a number of components.  For the stablecoins, as each of these areas expands, the total impact is multiplied.  Some of them are:


- the number of stablecoins
- number of wallets
- number of merchants/vendors/websites accepting them
- the number of goods or services that can be purchased


Each of these can grow in its own way.  We can see the feedback loop derived from the fact that as more [merchants](https://inleo.io/@leoglossary/leoglossary-merchant) accept the stablecoin, this incentivizes more users.  At the same time, merchants are motivated to accept this as a means of payment if more of their [customers](https://inleo.io/@leoglossary/leoglossary-customer) are users of the network.


Of course, the growth of the entire crypto market, and people turning to it in general is also a wave that will aid stablecoin adoption.


This is not a trend that is going to be stopped.


____


[What Is Hive](https://inleo.io/@leoglossary/leoglossary-what-is-hive)





Posted Using [InLeo Alpha](https://inleo.io/@taskmaster4450/the-growth-of-stablecoins-is-unstoppable-2gp)