16 years after the invention of Bitcoin, the blockchain industry has yet to solve the myriad problems plaguing traditional finance. A stablecoin network optimized for global payments in localized currencies could fix that, said former Binance.US CEO and founder of 1Money Network Brian Shroder.
In an interview with Cointelegraph, Shroder explained the motivation behind launching 1Money, a layer-1 network designed to support multicurrency stablecoin payments.
“Our mission is to make stablecoin payments more accessible and practical for everyday use,” said Shroder, while pointing to peer-to-peer transfers, e-commerce purchases and cross-border remittances as important use cases.
“We envision a global network powered by stablecoins representing all major currencies,” he said.
The stablecoin market has grown into a $222-billion behemoth, led by Tether’s USDt (USDT) and Circle’s USD Coin (USDC). Combined, these two US dollar-pegged stablecoins represent more than 86% of the overall market, according to CoinGecko.
1Money isn’t the only company working on a stablecoin payment network. In November, Robinhood, Kraken and Paxos formed a consortium to launch the Global Dollar Network, which is backed by the USDG stablecoin on Ethereum.
Meanwhile, blockchain company Ripple has also launched a stablecoin network for global payments and collateralization for tokenized real-world assets.
However, unlike the Global Dollar Network and Ripple, 1Money is designed to natively support multiple stablecoins. This is rooted in the belief that stablecoins will evolve into a multicurrency market fueled by demand for localized remittances and payments. Shroder said:
“We believe there is significant potential for stablecoins denominated in other currencies to grow, particularly as the stablecoin market evolves and diversifies, and as demand for localized stablecoin financial solutions and use cases increase, such as local commerce, the simplification of currency conversion and crossborder trade.”
This future includes facilitating stablecoin-to-stablecoin swaps with 1Money Network as a settlement layer, said Shroder.
The vast majority of stablecoins are “fiat-backed,” meaning they intend to hold equivalent currency reserves backing their tokens. Source: CoinGecko
Although 1Money plans to eventually support several stablecoins, its initial focus will be “supporting fully reserved stablecoins with selection based on the issuer’s reputation, liquidity, compliance and market demand,” Shroder said.
Related: Stablecoins will see explosive growth in 2025 as world embraces asset class
Stablecoins: Solving real-world problems
For all their supposed growth and innovation, blockchains beyond Bitcoin have yet to solve the issues that have plagued traditional finance.
According to Shroder, “many layer-1 and layer-2 protocols create new user pain points such as long and unpredictable settlement times, expensive and highly volatile fees, confusing requirements (like having to hold two assets to send one, including holding speculative assets), capacity, scalability and performance issues, and concerns around compliance.”
For this reason, critics like Jimmy Song argue that blockchain technology creates more problems than it purports to solve.
However, stablecoins, with their ability to facilitate crossborder payments and remittances, are a notable exception.
To illustrate this example, blockchain analytics firm Chainalysis showed how sending a $200 remittance from Sub-Saharan Africa is roughly 60% cheaper using stablecoins than traditional fiat rails.
Sending money using stablecoins is significantly cheaper than other fiat-based remittance methods. Source: Chainalysis
If blockchain technology goes mainstream, it’ll likely be driven by stablecoins, according to a November report by consultants Quinlan & Associates and IDA, a blockchain developer.
The report found that cryptocurrencies, including stablecoins, represent just 0.2% of worldwide e-commerce transaction value.
Stablecoins have three major features encouraging usage: blockchain technology, fiat-value representation and price stability. Source: Quinlan & Associates, IDA
“Paired with blockchain-enabled favorable features such as programmability, stablecoins can offer cost efficiency, enhanced transparency, 24/7 availability and faster processing that traditional financial systems simply can’t match,” said IDA CEO Lawrence Chu.
Related: US CBDC ‘is dead’ under Trump, but stablecoins could be set to explode