Not so long ago, you knew where you were with money. A central bank like the Federal Reserve or the Bank of England issued dollar bills and pound notes. And you used them to buy and sell things.
If some technologists are right, then one of the newest trends in payments technology — stablecoins — are about to enter a “supercycle” that will swamp the world with more than 100,000 such payment systems within five years. Reconciling those coins — essentially crypto that is pegged to a real-world currency — will require a whole new financial infrastructure. No wonder the establishment is getting jittery. “This is going to involve a fundamental rewiring of the financial system,” one official told me.
Blockchain-based stablecoins have multiple progressive use cases. In countries with unstable currencies, a dollar peg for a stablecoin user might be attractive. In countries with slow or dysfunctional payment systems, they offer an efficient alternative. And for those who want to trade crypto, they are a route back to the fiat financial system.