Stablecoins

Published on Jan 4, 2025

I'm not bullish on cryptocurrency; in particular I've always thought that the proof-of-work infrastructure for mining and transaction clearing (Bitcoin and Ethereum) was too energy-wasteful and too slow to make it useful for commerce. Ethereum seems to have solved the energy problem by means of switching to proof-of-stake and somehow they've greatly improved the transaction speed problem, but I don't know how and am wary. It also seems crazy dangerous to distribute immutable programs on a blockchain. And most other tokens and NFTs seem like scams.

I haven't really thought much about tethercoins such as Tether and USDC, until I listened to the All-In podcast yesterday. Chamath discussed stablecoins at 23:12 into the podcast. His points were:

• Stablecoin usage is decoupled from the volatility in the rest of crypto, and its usage is steadily growing [since mid-2020], primarily in "wholesale" type transactions (e.g. B2B payments across national boundaries like remittances, etc.)

• The transaction volume is staggering; the monetary volume of stablecoin transactions in 2024H1 exceeded the monetary volume of all Visa transactions for the same period.

• He thinks a key trend in 2025 is going to be stablecoin payment rails starting to eat into the credit card duopoly of Visa/MC. (He also thinks that the incoming Trump administration is going to go after the Visa & MC duopoly and their [50%+ annual profit margin](https://www.youtube.com/watch?v=ks3wP1nlg6U&t=6s).

My big problem is that I'm not sure how to invest in stablecoins; simply buying them doesn't seem like an investment since by definition they won't gain in value.