Our world is becoming increasingly digital in almost every aspect. From how we order groceries to how we consult our doctors, to how we catch up with our families, our physical and digital lives are now merged. This digital progression is spreading and accelerating, especially in the way we relate to money. Proof of this is that by 2025 it is estimated that 70% of transactions will be carried out digitally.
It is a significant evolution that reflects greater momentum in the real transformation of financial services. Although much of what seems normal to us today is actually just the beginning of the innovation potential to implement a new global digital payment standard, offering incredible possibilities for speed, access and cost when making digital transactions. This transformation begins with stable Cryptocurrencies.
Stable CryptoCurrencies (Stablecoins) have become a buzzword, but not everyone uses the term in exactly the same way. On the Stellar network, stablecoins are considered as digital currencies whose value is pegged to fiat money. They are digital tokens issued by financial entities and backed one-to-one by dollars, yuan or euros (or any global currency), so a user can easily convert stablecoins to the same value in fiat.
Stablecoins enable global financial systems to be interoperable because they act as a bridge between the fiat and digital worlds. Using stablecoins, users can transfer values from the traditional banking system, such as a bank account, to a blockchain (blockchain), where they have access to a global network to make cross-border payments, and between different currencies, without friction or bureaucratic obstacles .
For example, if a user residing in Spain wanted to send money to a family member in El Salvador, they could convert euros from their bank account into a stablecoin (backed by euros) that can be easily and quickly exchanged for a stablecoin backed by dollars { official currency in El Salvador} through a blockchain wallet, without long waiting times or paying large commissions to the bank. From there, the user in El Salvador has the flexibility to keep, save or spend their stablecoins, or send them to their bank account, converting them to traditional dollars. Stablecoins help make sending money almost as easy as sending an email, and thanks to the Stellar network, that also means global reach, near-instant transaction times, and really low costs.
Stellar was designed for stablecoins before the term stablecoin even came into use. Stellar was built with a core focus on asset issuance, with the ability to create a redeemable and tradable digital asset backed by any real-world asset. Such assets include not only fiat money, but also other forms of value, such as stocks, bonds and commodities. The ability to issue and redeem assets is one of Stellar’s most powerful features.
Stellar offers a generalized toolset, with simple code and built-in compliance functionality. This functionality is implemented at the protocol level; Tokenization is a fundamental part of the network, so the supporting code is trusted, vetted, and easy to work with. Stellar also makes it easy for Anchors, which is what stablecoin issuers are called on Stellar, to connect to existing systems to handle KYC verifications, and convert tokens to money at the bank. Any financial institution that can accept deposits can Easily integrate with Stellar to establish an on- and off-network platform, meaning money flows efficiently between traditional and digital financial pathways. As more and more Anchors connect to the network and issue stablecoins, These nodes become fully interoperable, and the effect on the network increases exponentially.
Going back to our example between Spain and El Salvador, when euro and dollar stablecoins are exchanged seamlessly through Stellar’s order book feature, a connected global financial infrastructure is created. This is how interoperability comes to life. Applied to the rest of the world’s currencies, it provides complete interoperability between them, enabling connected financial systems from anywhere in the world to work together on a single platform.
In today’s world, each region has its own payment system (SEPA, SPEI, etc.). These systems were created to serve specific jurisdictions and not the global community at large. As a result, global payments made through traditional financial avenues may suffer from increased delays, costly fees, and limited geographic reach.
This is just the beginning of the journey. It is clear that the digitalization of money is beginning to prevail in the same way that so many other digital transformations have brought new value to our daily lives, in such a way that today it is difficult to imagine that we have ever been able to live without it. Now is the time to bring that kind of innovation to money and create the new global payment standard.
