Stablecoins

The fundamental problem with stablecoins is that they are tied to the USD, a fiat currency known to be losing its value at roughly 10% per year. Other problems include the fact that you can't self-custody, i.e. the keys can't be buried in your backyard.

Nevertheless, for most of the world, stablecoins (specifically Tether) are a godsend because the fiat currency of their countries are so much worse than USD. Everybody outside the US wants USD.

Gresham's Law: "Bad money drives out good." In other words, when there are two forms of currency in circulation, one that is of lesser intrinsic value (bad money) will be used in transactions, while the more valuable currency (good money) will be hoarded or exported.

Tether will help prolong USD's survival and dominance around the world. US politicians are embracing it.

Adam Curry nicely breaks down how Stablecoins work, Tether, and the likely future of the US Digital Dollar system in this 5-minute segment from the Joe Rogan show.

🚨NEW: Adam Curry nicely breaks down how Stablecoins work, Tether, and the likely future of the US Digital Dollar system. (Worth a watch if you don't know about this subject)

"A stablecoin is a digital dollar thats pegged to the dollar so it's always a dollar. It's already being… pic.twitter.com/tpllY9kuGr

— Autism Capital 🧩 (@AutismCapital) February 14, 2025

25-minute segment of a roundtable discussion in which Bitcoiners think through the impact of Tether on 140 different fiat currencies and the circuitous journey which will ultimately lead to Bitcoin.

January 30, 2025 - Interesting new wrinkle in the Tether/Bitcoin relationship: Tether announced that it will mint Tether directly on Bitcoin's Lightning network. We are waiting for deeper analysis, but this seems to make Tether more efficient, trustworthy, and universal. And those with an even bigger perspective will recognize yet another proof that the entire financial world is being reprogrammed to operate on top of Bitcoin rails. Bitcoin ownership is the simplest way to get the most diversified exposure to the productivity of the new decentralized world. Simply have bitcoin "under the mattress" will allows one's value to rise as the new Googles, Facebooks, Visas, Wells Fargos, etc. are built on top of bitcoin to take advantage of its efficiencies and trustlessness—no middlemen needed for finality of transactions. (1-minute announcement video)

Tether 🧡 Bitcoin
Tether Brings USDt to Bitcoin’s Lightning Network, Ushering in a New Era of Unstoppable Technology
Read more: https://t.co/xJVKLHfht0 pic.twitter.com/PfftiXMLSO

— Tether (@Tether_to) January 30, 2025

The bottom line is that Tether will be a huge simplification of the USD system by removing banks, weekends, personnel, banking holidays, credit cards, payment gateways, and dozens of other unnecessary middlemen from transactions. Tether will also benefit the world by removing the inefficiencies and complexities of 140 different fiat currencies. But even longer term, people should be aware that Tether/USD continues to be a melting ice cube as its value is tied directly to the USD, a fiat currency. For anything other then day-to-day transactions, people should consider moving value into the harder, non-country-specific, equally convenient protocol/currency/commodity of Bitcoin.

One need only to look at a Bitcoin-to-USD chart to get a feel for the horrific long-term performance to expect from Tether.

Bitcoin priced in USD from 2012

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