Washington, DC – February 03: American secretary of the Treasury Scott Bessent (L) and Howard Lunestick, United States … More
Many readers could be familiar with Bitcoin. However, a new entrant to monetary order is the stablecoins. They speak of the city of DC – and the players of Stablecoin perform major geopolitical and economic movements.
What a stablecoin is
A Stablecoin is a cryptocurrency token issued by a company that undertakes to exchange or exchange an asset in return for each token issued. The US dollar often supports stablecoins; For example, the USDC (USD part issued by Circle) and the USDT (TETHER) are the largest stablecoins and they are supported by the US dollar.
In the example of a stablecoin to support the United States, a transmitter will undertake to give you an American dollar for each token bought with them. This commitment means that you must have confidence in the underlying company to organize enough reservations to make you whole – and that they do not engage in a fractional reserve, which means that they emit more tokens than they hold in terms of dollars, in the hope that people will not come and will not “run on their reserve” – similar to a bench.
Some stablecoins are denominated in Euro and labeled in other currencies, such as the Eurc. When Meta proposed the Balance project (which became Diem) – the original idea was to create a stablecoin supported by a currency basket. There is also Different stablecoins – from the reserve sustained like those described to the stablescoins algorithmic for even the stablescoins supported by products which offer gold redemptions for a token.
Stablecoins offer a token that can be used to settle payments in the underlying currency – a very popular solution for those who do not have access to the bank in the currency (ex, banking in American dollars) or for those who seek to avoid bank costs and the cost of transactions and transactions of cross -border transfer.
What is the difference between stablecoins and bitcoin?
Stablecoins and bitcoin differ in several ways. The first is that a stablecoin does not need a native network – the most popular, Tether, can be sent to any blockchain at the lowest costs. There are attachment integrations with Tron, Ethereum, and now, with the Lightning network On Bitcoin. The USDC follows the same principle – it can be transmitted on several channels, in particular its integration with the sustained coinbase Basic layer. Stablecoins do not need a “blockchain” – they can work using other channels to be transmitted.
The Stablecoins are based on an issuing company that can safeguard each token with real assets unlike Bitcoin. This dependence on a company also means that the company can be used to freeze the funds held in this stablecoin. A human CEO is sensitive to political pressure in a way that a neutral protocol would not be.
Unlike Bitcoin, the support function is not peer-to-peer computers and large-scale markets, but only one business acting as a banker in a way. Consequently, there is no global network of peers, minors or other stakeholders to hold responsible stablecoins beyond their internal practices.
Stablecoins must keep reserves as part of their business model, and they make a profit on these reserves. For example, Tether holds many American treasury bills. This reserves of reserves also means that stablecoins remain stable at the price of the underlying assets. Bitcoin has volatility compared to fiduciary currencies as the US dollar because it has its own network and supply dynamics.
Stablecoins are supposed to be set 1: 1 with an asset like the US dollar – and if it is destroyed, this could spell the end of this stablecoin. When it was found that Circle held reserves at Silicon Valley Bank, for example, which were threatened, the USDC exchanged under the US dollar in Asia. This threat may have caused significant damage to the USDC if their funds were not then guaranteed when the Silicon Valley Bank rescue. And this is what caused the stablecoin algorithmic Terra to get rid of.
How do stablecoins take place in global geopolitics?
The Stablecoins earn an incredible sum of money with the small teams, which allows them to exert a lot of influence. They are the knot behind the argument of the Trump administration that “crypto” strengthens the US dollar rather than vice versa. For example, the attachment made on $ 13 billion in profits for 2024 While holding around $ 113 billion in direct or indirect assets of US treasury bills. For reference, it is more than the $ 97 billion than Germany A in American TreasuryThis means that Tether holds more debt from the American Treasury than a major G7. Stablecoins are now exceeding countries in terms of American purchase and debt.
Stablecoins are also a new way of accessing the US dollar without an American bank – which seems without integrity, but at the same time, they cooperate with American police at critical moments. While some countries decrease their reserves of American debt and assets, their people bought the bottom in the stablescoins – demonstrating a desire for US dollars that reshapes global debt and geopolitics.
This model is the most important in China, where people have been arrested To buy tiesAnd where there are restrictions on the exchange for cryptocurrencies – and where the Chinese government tries to cover itself against the domination of the US dollar, moving away from Purchases of US Treasury Voyages.
Now the congress seeks to regulate stablecoins – And the Trump administration is filled with “pro-Crypto” supporters who seek to underline the argument that “the crypto” is good for the US dollar- while other countries like China appeal to the use of ties. Although the Trump administration has promised never to embrace a digital currency from the central bank and signed orders for this purpose, it has significantly cozé to stablecoins – which, with a support company, can still censor And freeze the accounts and transactions that the American government wants to be arrested, a power that would be much more difficult, if not impossible, with an open and decentralized protocol like Bitcoin.
Tether and Circle also has a leading seat at the table, with President Trump Sign a decree Strengthening that the two companies have helped to dominate the US dollar. Howard Lungick, someone who fiercely recommended for the attachment (and took advantage of being their main cash dealer), is now the trade secretary – the point of implementation of Trump’s commercial actions in the world. The Stablecoins have transformed tons of profits and the lower demand from around the world into a seat at the table of geopolitics.
