Is stablecoin the future of money? – Part 1

This article is the first in a two-part feature.

Back in the summer of last year, I published a four-part series on Bitcoin in The Gleaner (2/July/25). In that series, I tried to cut through the hype and explain what Bitcoin really is, not just the token, but the technology behind it.

I also touched briefly on something called a “stablecoin”. The name itself is telling. If you have to call something “stable”, it’s probably because everything else around it is unstable. And that’s exactly the case with crypto.

Bitcoin, the poster child of cryptocurrency, is famously volatile. One day it’s up 20 per cent, the next it’s down 30 per cent. That kind of rollercoaster ride might be thrilling for traders, but it’s a nightmare for anyone trying to use it like money. In fact, in Part 1 of that series, I made it clear: Bitcoin will never replace money. Why? Because money, to be useful, must be stable. And that’s where stablecoins come in.

What exactly is a stablecoin?

At its core, a stablecoin is a type of cryptocurrency that tries to do what Bitcoin can’t, stay still. It’s designed to hold a steady value, usually by being tied, or “pegged” to something we already trust, like the US dollar or the Euro. So while Bitcoin might swing from US$30,000 to US$60,000 in a matter of weeks, a stablecoin like USDC or USDT is supposed to stay at $1.00, give or take a cent.

Now, how does it do that? Well, there are a few different models. Some stablecoins are backed by actual cash in a bank account, every digital coin matched by a real dollar somewhere. Others are backed by other cryptocurrencies, using smart contracts to keep the price in check. And then there are the algorithmic ones, which try to manage supply and demand with code alone. That last group? Let’s just say they’ve had a rough ride. You may remember TerraUSD? It collapsed in spectacular fashion (Google TerraUSD).

But regardless of the model, all stablecoins have one thing in common: they run on a blockchain, multiple blockchains in some cases. That means they inherit the same benefits as Bitcoin – speed, transparency, and the ability to move money across borders without needing a bank. Most of them live on Ethereum, but you’ll also find them on Solana, Tron, and other blockchain networks.

So what’s the big deal? Why are people so excited about stablecoins?

For starters, they solve a real problem. If you’re a business owner, you can’t afford to accept payment in something that might lose half its value before you restock your shelves. Stablecoins offer the speed and efficiency of crypto without the stomach-churning volatility.

They’re also a lifeline for people in countries with unstable currencies. Imagine living in a place where your pay packet loses value every week. Holding a dollar-pegged stablecoin could be a way to preserve your savings.

But let’s not get carried away. Stablecoins aren’t perfect. Many of them are issued by private companies, which means you have to trust that those companies actually have the reserves they claim. And regulators are circling. Governments don’t like the idea of private money floating around outside their control. So the future of stablecoins is still very much up in the air.

How do stablecoins compare to BitcoinS?

They’re like cousins who grew up in very different households. Bitcoin is wild, independent, and allergic to authority. It’s a store of value, like digital gold. Stablecoins, on the other hand, are the straight-laced sibling – predictable, practical, and designed for everyday use. But here’s the twist; they actually work well together. Traders use stablecoins to move in and out of Bitcoin positions without touching traditional banks. And for people who want to dip their toes into crypto without the risk, stablecoins are a gentle entry point.

In fact, stablecoins are often the bridge between the crypto world and the traditional financial system. They allow people to hold digital dollars without needing a US bank account. They make it easier to send money across borders, to pay freelancers in other countries, or to move funds between crypto exchanges. And because they’re programmable, they can be used in smart contracts – automated agreements that execute themselves when certain conditions are met.

But again, stablecoins aren’t silver bullets. The biggest stablecoins today – like Tether (USDT) and USD Coin (USDC) – are controlled by private companies. That means they’re only as trustworthy as the people running them. If those companies mismanage their reserves, or if regulators crack down, the whole system could wobble. We’ve already seen stablecoins lose their peg before, and when that happens, confidence evaporates quickly.

Still, the idea behind stablecoins is powerful. They take the best parts of crypto – speed, transparency, global access – and combine them with the stability of traditional money. That’s a compelling mix, especially in a world where financial systems are increasingly digital and increasingly global.

In part 2, we’ll look at how stablecoins are changing the game for cross-border trade, how they stack up against central bank digital currencies (CBDCs), and why geopolitics might be the biggest force shaping their future.

Stay tuned.

Michael Ennis BA, MBAInformation System ConsultantEmail: mail2michaelennis@gmail.com

Full disclosure: The author is not an investor in digital assets, including bitcoin. He however, is a director of a bitcoin technology company.