Cryptocurrencies as an Investment Vehicle
Payment platforms always tried to diversify their revenue streams and customer bases. One of the common diversification strategies is to support as many payment types as possible. These payment types include ACH payments, credit/debit cards, and (a recent addition) cryptocurrency operations.
Why cryptocurrencies?
Will cryptocurrencies survive the fall of interest rates?
All world economies are suffering from the consequences of the pandemic. In order to mitigate them, most countries are resorting to two common strategies. US Federal Reserve, for instance, is cutting interest rates. This step is intended to make borrowing more affordable (primarily, for businesses). The other strategy is provision of different rescue packages. Again, they are targeted primarily at SMEs, that are the “blood vessels” of the economy.
Traditionally, investors relied on low-risk instruments. These included saving or checking account, money market, or government bond. Presently, the modest yield that these investment vehicles provide is about to decrease or disappear. Reasons: low interest rates and looming inflation, caused by money injected into economies through rescue packages. So, what alternative options do investors have? Will cryptocurrency market also suffer from potential inflation?
So, does it make sense to invest in cryptocurrencies?
Crypto market was traditionally considered a highly volatile environment. So, can cryptocurrencies ever become a low-risk investment? Well, recently, some companies started introducing stablecoins. These cryptocurrencies are featured in worldcoinindex. However, unlike Bitcoin or Ether, they are pegged to US dollar rate. Consequently, they are unlikely to suffer serious price fluctuations. BUSD, USDT, PAX coins are just a few examples.
So, some businesses are already offering investment instruments, denominated in stablecoins. And what is the annual yield? Up to 16%! Enough to offset potential inflation levels. Naturally, many investors are looking at stablecoins as their new hope.
Near prospects
Under threat of inflation investors will keep searching for higher yields. So, cryptocurrencies, especially, stablecoins are likely to become a promising and popular investment vehicle. And if customers can make purchases using their cryptocurrency accounts instead of conventional checking accounts, this will be an additional boost for cryptocurrency investments.
Some stablecoins have, in fact, become an equivalent of conventional currency. Indeed, they retain their peg for years and you can transfer them from one wallet to another without much effort. Plus, such companies as Celsius or Nexo allow you to easily invest in stablecoins. Additionally, you can invest stablecoins with such DeFi (decentralized) platforms as PancakeSwap or Compound.
To summarize
Cryprocurrencies and, particularly, stablecoins might gain importance as a payment medium in the near future. That is why payment gateways and payment platforms should be able to support cryptocurrency payments. For example, Visa has recently introduced payment settlement in USDC stablecoins.
As stablecoin peg and rate do not change, they become a handy payment instrument for businesses and consumers. So, support for cryptocurrency payments becomes a critical feature for payment platforms.