Those unwilling to take the leap and get to Bitcoin in one jump may use stablecoins as a bridge. People looking for something familiar will see those coins as the transition between fiat money and the pioneering cryptocurrency.
Many agree that Bitcoin (BTC) is the current decentralized and innovative digital money. Most of the cryptocurrencies created later, including stablecoins, cannot solve the known problems of money.
The creation of stablecoins is questionable, as Bitcoin also emerged to counteract the issuance policies making the US dollar less stable. However, they may serve as a bridge for more people to understand BTC and incorporate it into their daily lives.
Concerning exchanges, new users can see them as banks and thus find it comfortable to use them to familiarize themselves with the cryptocurrency ecosystem.
Not everyone is willing to switch from the world of fiat to Bitcoin in one jump. For that reason, some tools can bring people closer to the pioneering cryptocurrency despite not corresponding to its value proposition.
New users see all cryptocurrencies as part of the same, a view with which many may agree or not. Since most Venezuelans think Petro is like Bitcoin, many receive stablecoins like Tether (USDT), not thinking about decentralization or issuance limits.
Stablecoins Offer the Illusion of Stability in the Short Term
Given that most people want stability, they are afraid to include Bitcoin in their everyday life. Due to market volatility, purchasing power becomes uncertain from one day to the next or even from morning to afternoon.
Stablecoins keep the value stable in the short term, but the US dollar has lost much strength, and inflation is worsening the situation. However, those living with cash do not find a drop of over 20% in a month attractive.
People have moved almost USD 70 billion worth of Tether over the last 24 hours alone. Regarding BTC, they have moved just over half, demonstrating the dominance of USDT, the main stablecoin in the market.
USDT, USDC, BUSD, and DAI are similar to national/fiat currencies, which people already know. Given that the world still runs on fiat money, people tend to demand more of those assets than the latest cryptocurrencies.
A World Dominated by Bitcoin Will Still Have Stablecoins
Not everyone using Bitcoin will become a true believer in it, as most use it as an investment vehicle. Meanwhile, a few others still believe it is a way to make quick and easy money.
Bitcoin may eventually become the protagonist, and the world will understand how it changes everything. However, that may never happen, and the US dollar or any other fiat currency may remain the unit of account. In the latter case, using a stablecoin would be unavoidable and even a necessary evil.
Merchants find it inconvenient to price their products in BTC, avoiding fiat money or even stablecoins as a unit of account at all costs. The volatility in the market would enslave them to exchanges to change their prices. Even with an automated system, trading would be problematic for their customers due to the constant change in market value.
Bitcoin may become the preferred medium of exchange or store of value, but people will still need something better adapted to their everyday life. The answer is in stablecoins, which are halfway between what people know (fiat money) and Bitcoin.
By Alexander Salazar
