eZAR, the first stablecoin in South Africa is aiming to transform payments within the country by leveraging the power of digital currency and fiat.
The company behind eZAR is called EOSZa and CEO Rory Mapstone is optimistic that the stablecoin will revolutionize the way South Africans pay for goods and services.
“Stablecoins solve a problem that comes up with bitcoin and other blockchain-based cryptocurrencies”, Mapstone said.
“If I have a bitcoin, I’m constantly worrying about the price and wanting to sell when it drops and hold on to it if it rises.”
A stablecoin is a form of digital currency that combines the best of both cryptocurrencies and fiat currencies – operating in a trust-minimized fashion. It is used for cheap and rapid transfers of value whilst maintaining a peg with fiat like rand. This makes stablecoins well-suited to use cases where volatility concerns rule out offerings like Bitcoin or Ethereum.
While the price of Bitcoin may fluctuate from time to time, stablecoins attempt to solve this problem by pegging its value to some other assets in order to keep its value relatively constant. In this case, eZAR is pegged to the rand, meaning that one eZAR coin is equivalent to one rand.
For everyday use, stablecoins represent a new form of money that is convenient to use, especially among merchants and customers. With the eZAR stablecoin, South Africans can pay to merchants at a lower cost and conveniently than using normal money.
“Simply put, stablecoins exist so that users can benefit from the characteristics of blockchain-based digital currencies, including low transaction costs and instantaneous payments without the need of a centralised middleman like a bank.”
Users will able to buy the digital coin and hold it in the CoolX mobile wallet app developed by EOSza. eZAR works in a similar fashion like Virgin Money Spot, which also allows users to make digital payments directly from their mobile wallets.
Mapstone believes that the launch of eZAR will help put South Africa “at the leading edge” when it comes to blockchain innovation and use. He commented:
“The formation of eZAR is an important first step in helping South Africans to participate in the world of blockchain technology so that local companies can start using it to build applications”.
While stablecoins may be seen as the future of the cryptocurrencies in ecommerce or online transactions, it must be noted that cryptocurrency is still young and evolving. There is no guarantee of the continuity of any crypto projects and sustainability is still a big question.