Why Stablecoins are the Super-Conductors of Financial Services

I recently came across an X-post from Patrick Collison , coinciding with news about Stripe's acquiring Bridge (a stablecoin payment company) for $1.1B. After reading this, I couldn't agree more with the fact that stablecoins are emerging as the new global standard for financial services. Comparing this shift to a historical technology revolution, stablecoins are not just a new version of gold in microchips—they are like graphene, a material that conducts electricity without energy loss. They are transforming payment systems with their ability to enable real-time, cost-effective global transactions.

Why is Stripe Acquiring a Stablecoin Company?

Stripe has been a leader in digital payments, especially in digital-card processing, for nearly a decade. As international payments increase with global economic integration, it's obvious why Stripe would enhance its capabilities to handle various currencies. The $1.1 billion acquisition of Bridge marks the dawn of an era where industry giants like Stripe will embrace the advantages of stablecoin platforms. This move not only affirms the significance of stablecoin technology but also paves the way for more integrated, global financial services. By integrating Bridge’s capabilities, Stripe aims to expand a) its cryptocurrency acceptance and b) effectiveness in handling settlement among multiple currencies, potentially becoming the leading digital payment player globally.

Why Stablecoins is the real thing?

Stablecoins, such as USDC, have revolutionized financial transactions. They offer stability linked to the U.S. dollar and ensure that transactions are completed almost instantaneously. This positions them as a crucial innovation within financial services, akin to the role of superconductors in technology.

• Cost Efficiency and Speed: Recent advancements in blockchain technology have significantly reduced the cost of transactions involving stablecoins. For instance, sending USDC on platforms like Ethereum now costs around $1 on average in gas fees, a significant decrease from $12 in 2021.
• Market Impact: This efficiency has led to transaction volumes for stablecoins that more than double Visa's $3.9 trillion over the same period, demonstrating their increasing prevalence in financial ecosystems that have traditionally been dominated by giants like Visa and PayPal.
• Infrastructure and Capacity: The backbone of this revolution lies in the scaling of blockchain infrastructure, which now supports 50X more transactions per second than just four years ago—enhancing the capacity and accessibility of stablecoins.

What's Next?

We will continue to see more applications for stablecoins in real-world scenarios. As highlighted in a16z's recent report, stablecoins have found a product-market fit, particularly for cross-border payments, where the cost of conducting a USD international transaction can decrease from $44 to less than $0.01. This represents not only innovation but also a new platform for future financial services. As these developments unfold, it’s clear that stablecoins are leading the conversation in financial technology.