Promising Implications of Accepting Payments for Ethereum

Visa has announced that it will support payments in Ethereum via the USDC stablecoin. What will this bring to Ethereum, and how will it affect the most stable coin, as the payment giant enters the crypto game.

VISA integrating into Cryptocurrencies

The credit card giant has already completed its first transaction with the USDC, and has eliminated the need to convert cryptocurrency to fiat for payments. This alone is expected to generate significant demand for USDC, as it facilitates crypto transactions through a more stable exchange environment. Stablecoins have already gained significant momentum, exceeding the transaction volume of $ 1 trillion in 2020 alone.

Cryptocurrency is becoming increasingly dependent on stablecoins, as the most liquid trading pairs are now denominated in stablecoins, and much of the activity in decentralized finance (DeFi) and non-exchangeable tokens (NFT) is also carried out through them.

In particular, the US dollar has grown significantly over the past two years. The daily transaction volume for the USDC calculated on Ethereum has increased from an average of less than $ 20 million in March 2019 to almost $ 3.8 billion per day in March 2021.

This feat was achieved thanks to most, if not all, of the activity coming directly from the crypto space. With the advent of Visa moving to support USDC transactions, stablecoin transactions are ready to move beyond the cryptocurrency circles.

The ability to easily make transactions with stablecoins in the real world stimulates the demand for crypto assets and protocols, as it eliminates friction points, such as the need to cash out and withdraw funds to a bank account.

Similarly, Tether has published a certification confirming that it has $ 35 billion in assets supporting USDT, the largest stable coin. This push for greater transparency should also lead to wider adoption, as users may feel more comfortable as concerns about the lack of necessary reserves subside.

Ether wins the most

One of the biggest beneficiaries of both of these news stories is Ethereum. The smart contract platform pays for most of the volume of stablecoins, which requires its own coin-ETH to pay commissions on its blockchain.

In addition, Ether holders will benefit from the introduction of stablecoin with its upcoming EIP 1559 update. For those unfamiliar with EIP 1559, it offers a new Ethereum transaction fee structure, in which a portion known as the base fee is burned inversely to the transaction activity.

EIP 1559 can effectively reduce the supply of Ether as transactions grow. Consequently, the growing adoption of stablecoins is likely to lead to Ethereum deflation. Ethereum researcher Justin Drake classifies this transition as the transformation of Ether into super-powerful money.

With the implementation of EIP 1559 in July, Ether holders will soon be able to benefit from all transactional activity occurring in its block chain. Despite the current high fees, the number of transactions made on Ethereum already exceeds 1.2 million per day.

Finally, PayPal announced that it will soon allow US users to make payments using cryptocurrency. This allows merchants to accept cryptocurrency for payment and easily convert it into US dollars. The initial release will support Bitcoin, Ethereum, Bitcoin Cash, and Litecoin for payments on its network of 29 million merchants. Needless to say, this should also encourage the adoption of these cryptocurrencies, beyond trading.

In general, the support of organizations such as PayPal and Visa makes it easier to use cryptocurrency. As stablecoins become more legitimate, and even federal banks are allowed to use and issue them, the long-standing promise of mass adoption of the cryptocurrency is finally approaching.

Ethereum, in particular, will benefit from the latest news. Its upcoming EIP 1559 should create deflationary pressure for ether and allow it to benefit from the growing NFT and DeFi ecosystem. Ultimately, this coincides with the interests of Ethereum users and ether holders, as wider distribution theoretically leads to higher prices due to reduced supply.

Source: https://decimal.news/promising-implications-of-accepting-payments-for-ethereum/

Decimal helps communities to issue and manage blockchain assets.

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