00:07Unlike traditional cryptocurrencies like Bitcoin and Ethereum, stablecoins do not float freely.
00:13They are linked to an underlying asset, offering less volatility and a level of certainty for
00:19investors.
00:20Stablecoin is basically what the name says.
00:23It means that there's something supporting this specific coin, or then this crypto, because
00:27it is also based on the blockchain technology.
00:31So it is a crypto, and it can be backed by gold, or it can be backed by other financial
00:36instruments.
00:36It doesn't really matter.
00:37Stablecoins are increasingly being used for payments, payroll, corporate cash management
00:42and cross-border trade.
00:44Quick transfers at a fraction of traditional banking costs are driving demand in Africa.
00:50Digital transactions can cut settlement times from days to minutes.
00:56They can receive their salaries, convert that to a US dollar-backed stablecoin, and then
01:00use that on an ongoing basis when they buy groceries, when they pay for petrol, whatever the case
01:05may be.
01:06But to fully close that loop, we need a fully, if we call it, integrated and adopted environment
01:12where digital assets become the day-to-day norm.
01:15The currency is not, however, shielded from geopolitical shocks like the one unfolding in
01:20the Middle East, causing disruptions to financial systems and markets.
01:24We implemented this back in 2022 already, where we perform services for corporations in the
01:34Asia-Pacific region, where they effectively pay us in US dollar-backed stablecoins.
01:38It's been set up in such a way that since the transaction is executed on their side, up
01:43until the point that the cash, the actual RAN, is locked into our bank account, it takes about
01:48three hours to execute that specific transaction.
01:50Tensions of the Middle East could have an impact on the movement of stablecoins across Africa.
01:57It will depend on the economic volatility of the region and the issuing party's ability
02:02to actually make that payment.
02:04It will also depend on which commodity or currency that stablecoin is attached to.
02:10The biggest stablecoins at the moment on the Ethereum platform are the US dollar stablecoins that
02:16are issued on the Ethereum platform, and that's mostly Americans. And basically what happens
02:21is that people moving their deposits away from banks give it to the stablecoin issuers and
02:25they put it in typically in financial market instruments like treasury bills and so on.
02:29Stablecoins may be relatively new, but are already challenging traditional banking, presenting
02:35fewer barriers and greater control for consumers. Some analysts believe stablecoins could eventually
02:42compete with national currencies, including South Africa's RAND.
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