Stablecoins Unpacked Pt 1: What Are Stablecoins and Why Should You Care?
$15.6 trillion.
That’s how much money moved through stablecoins last year. That’s more than Visa and Mastercard’s annual transaction volume!
Over the last few weeks, many people have asked me:
?? “Why are you posting about stablecoins?”
?? “What do they actually do?”
?? “Aren’t they just another type of crypto?”
Since I’m working with Nik Milanovi? to launch the world’s largest stablecoin conference, Stablecon , I wanted to take some time to explain stablecoins simply.
This is part 1 of a 12-part “Stablecoins Unpacked” series where I’ll explain stablecoins in easy to understand chunks and why they matter.
Let’s start with the basics. ??
What Are Stablecoins?
Imagine you’re buying or sending money abroad or trading crypto.
?? Wouldn’t it be great if you had digital money that worked like cash - fast, cheap, and always stable?
That’s exactly what stablecoins are.
? They’re digital dollars on the blockchain.
? They always aim to hold a steady value (1 stablecoin ≈ $1).
? They move instantly, with near-zero fees, and no banks involved.
Unlike Bitcoin or Ethereum, which can swing wildly in price, stablecoins are designed to be less volatile, making them ideal for real-world use cases like payments, remittances, and saving money.
One of the most widely used stablecoins is USDC (USD Coin). Circle, a regulated U.S. company issues it. Every USDC in circulation is backed 1:1 by real U.S. dollars or cash-equivalent assets. This makes it trusted, transparent, and widely accepted for payments and crypto trading.
Other major stablecoins include:
USDT (Tether): The most traded stablecoin, but with less transparency around its reserves. DAI: A decentralized stablecoin backed by crypto instead of U.S. dollars.
How Do You Get and Use Stablecoins?
For beginners, here’s a quick step-by-step guide to getting started:
Buying Stablecoins:
Storing Stablecoins:
Using Stablecoins for Payments:
Stablecoins are designed to be as easy as Venmo or PayPal, but without the high fees.
Why Should You Care?
Because traditional money is outdated and expensive.
?? Bank wires take days and can cost $20+ in fees.
?? Some remittance platforms charge 5-7% for cross-border payments.
?? Bitcoin’s price can swing by 10% in a single day, making it unreliable for payments.
Stablecoins solve these problems:
?? Speed: Transfer money in seconds, not days.
?? Cost: Fees are a fraction of a cent, even for large transfers.
?? Borderless: Anyone with an internet connection can access them - no bank account required.
They’re already being used in finance, e-commerce, and global payments - and the adoption is accelerating.
Are Stablecoins Really Always Stable?
Not always. While stablecoins are designed to hold a steady value, their stability depends on:
?? The reserves backing them – Are they fully backed by U.S. dollars or government bonds?
?? Regulation – Governments are still deciding how to treat them.
?? Market confidence – If people stop trusting a stablecoin, its value can drop (e.g., Terra/Luna collapse).
?? USDC and USDT are fully backed by reserves, making them more stable than experimental “algorithmic” stablecoins like TerraUST, which collapsed in 2022.
Understanding what backs a stablecoin is crucial before using it!
Real-World Examples: Stablecoins in Action
?? Sending Money Abroad – A worker in Mexico gets paid in USDC without waiting for a slow bank wire.
??? Online Payments – Shopify now accepts stablecoins for purchases.
?? Protecting Savings – Someone in Nigeria uses USDC to hold U.S. dollars instead of a rapidly inflating local currency.
?? Business Transactions – Companies are paying employees and settling invoices instantly.
Even Visa, Paypal, and Stripe are integrating stablecoins into their payment systems.
What’s Next?
Stablecoins are already disrupting global finance, but the big questions ahead are:
?? Will banks embrace them or try to stop them?
?? What rules are coming from governments?
?? How will stablecoins impact global finance in the next five years?
If you want to go deeper, here are some great reads:
?? Beginner-friendly explainer: Stablecoins in 1000 Words by Matt Brown
?? Introductory explainer: What is a Stablecoin? - USDC by Circle
?? Explore the stablecoin landscape: Stablecoin Market Map by Artemis
This is the first of a 12-part "Stablecoins Unpacked" series, where I’ll break down what you need to know about this growing space.
?? Want More? Join the Stablecoin Community!
?? Stay informed! Subscribe to The Weekly Stable by This Week in Fintech for up to date stablecoin news → https://www.thisweekinfintech.com/tag/weekly-stable/
?? Meet the pros in NYC! Join the Stable Salon, in collaboration with Will White → https://lu.ma/stablesalon?
?? Drop a comment: Have you ever used stablecoins? What’s your biggest question?
Building high-growth businesses. @ CEO, Founder, CTPO @ AI | FinTech | Payments | Digital Products | Web3 | DeFi @ Speaker, Venture Studio Partner @ ?Benefit from my unique expertise; try better solutions - ????
1 周Insightful start, Dennis Owusu-Sem! I've experienced firsthand how stablecoins streamline cross-border B2B payments. Interested to see how you tackle compliance challenges.
I'm quite skeptical about these things. I need to see a detailed and prudent federal regulatory framework for stablecoins and their issuers. That said, I'm open to doing more research and learning about it.
VC @ TLcom Capital | Stanford MBA | Harvard MPA
2 周love it
Director, Product Strategy at MoonPay | ex-VP at CoinMarketCap/Binance | Venture Partner at Hustle Fund
2 周Love to add MoonPay to the article where you can buy USDC/USDT via your favorite payment method (cards, apple pay, paypal, venmo) directly into your own non-custodial wallet! :)
Product Manager
2 周Benjamin Dada