After the global financial crisis and the subsequent government bailout of over leveraged financial institutions (“the Chancellor of the Exchequer is about to provide a second bailout for banks”), Bitcoin emerged as a non sovereign alternative aimed at achieving “a pure peer-to-peer electronic cash form that allows online payments to be sent directly from one party to another without going through financial institutions”. Although Bitcoin has successfully served as a censorship resistant and holder asset, independent of any central authority control, it has yet to become a practical tool for daily payments due to limitations such as low transaction throughput, slow settlement times, high fees, significant price fluctuations, and poor user experience. Although Bitcoin may ultimately prove to be a superior form of currency (able to withstand the depreciation of fiat currencies and the arbitrary decisions of central bankers), currently, the vast majority of global trade is still conducted in US dollars. The digital representation of the US dollar, stablecoins, is increasingly replacing the electronic cash system role originally envisioned by Bitcoin.
These ‘room temperature superconductors of financial services’ are bringing about change for individuals in high inflation or authoritarian regimes, enabling value transfer through low-cost peer-to-peer remittance payments, while enhancing user experience and real-time functionality for multinational corporations. In addition, we believe that the structural debt dynamics of the United States, the need to find new marginal buyers of US treasury bond bonds, the need to maintain the hegemony of the US dollar, as well as the Trump administration’s deregulation stance and macroeconomic policies, are laying the foundation for a long-term bull market to stabilize the currency. In this context, we expect the total circulating market value of stablecoins to expand to trillions of dollars.
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