Why Stablecoins Are The Biggest Thing In Crypto Since Bitcoin

I know I know, its a hot take but I do believe in it – Stablecoins are the biggest thing in crypto since Bitcoin. Why? I’ll give my opinion in this article. So, enjoy and feel free to disagree.

Cryptocurrencies have reshaped global finance, offering a decentralized alternative to traditional banking systems. However, price volatility remains a major obstacle to mass adoption. Who solves this problem? STABLECOINS.

Stablecoins solve this problem by maintaining a steady value, providing a reliable medium for transactions while retaining the advantages of blockchain technology. As a result, my conclusion – they are the biggest thing since Bitcoin. Case closed.

Okay, maybe not. Let’s just go in-depth and see why what I say might be making sense.

What Are Stablecoins and Why Do They Matter?

Stablecoins are cryptocurrencies designed to maintain a fixed value, typically pegged to assets like the US dollar, euro, or commodities such as gold. Unlike Bitcoin and other volatile cryptocurrencies, stablecoins offer price stability, making them ideal for everyday transactions, remittances, and decentralized finance (DeFi).

There are three main types of stablecoins:

1. Fiat-backed stablecoins – Pegged 1:1 to traditional currencies (e.g., USDT, USDC).
2. Crypto-backed stablecoins – Collateralized by other crypto assets (e.g., DAI).
3. Algorithmic stablecoins – Use smart contracts to control supply and demand (e.g., FRAX).

These assets enable users to store value without exposure to crypto market fluctuations while enjoying the benefits of blockchain, such as transparency, security, and fast cross-border transactions.

Bitcoin vs. Stablecoins: Store of Value vs. Medium of Exchange

We tried, NGL, we tried making Bitcoin a medium of exchange and it did not succeed. It did not succeed because it was never meant to do that. It was a sstore of value.

An asset where price swings of 10-20% in a day are common—makes it impractical for day-to-day payments.

Stablecoins, on the other hand, serve as a transactional medium by maintaining price stability. This allows users to send, receive, and hold crypto without worrying about drastic price changes. While Bitcoin is primarily used for long-term holding and investment, stablecoins function more like digital cash.

For cryptocurrencies to achieve mainstream adoption, they need to be practical for real-world use. The ability to pay salaries, buy goods, and settle contracts requires a stable unit of value. Stablecoins provide this, making them a bridge between traditional finance (TradFi) and decentralized finance (DeFi).

Some key reasons stablecoins are considered a game-changer:

• Cross-border payments – Sending stablecoins internationally is cheaper and faster than traditional banking systems like SWIFT.
• DeFi integration – Stablecoins power lending, borrowing, and yield farming protocols, enabling a decentralized financial system.
• Merchant adoption – Businesses are more likely to accept crypto payments if price fluctuations are eliminated.
• Financial inclusion – Stablecoins offer a banking alternative for people in countries with unstable economies or limited access to financial services.

Market Growth and Key Metrics

The total stablecoin market capitalization has surpassed $225 billion, marking a significant increase from under $140 billion at the end of 2023. Tether ($USDT) continues to dominate with a market cap exceeding $139 billion, followed by Circle’s USDC ($41 billion). Trading volumes remain strong, with stablecoins facilitating over $4.7 trillion in transactions in the past 30 days alone​.

Experts predict that the market could reach $400 billion by 2025, driven by expanding use cases, fintech adoption, and regulatory clarity​. The growing demand for stablecoins is fueled by their role as an alternative to traditional finance, particularly in regions experiencing high inflation or financial instability.

Major Players in the Stablecoin Market

The stablecoin sector is led by several key issuers:

• Tether ($USDT) – The most widely used stablecoin, accounting for over 60% of the market cap. Its adoption spans trading, payments, and remittances.
• USD Coin ($USDC) – Issued by Circle, USDC has seen growing integration in regulated financial systems and institutional platforms.
• Dai ($DAI) – A decentralized stablecoin backed by Ethereum-based collateral, offering an alternative to centralized issuers.
• Frax ($FRAX) – A partially algorithmic stablecoin that maintains its peg through a mix of collateral backing and supply adjustments.
• New Entrants – Fintech giants like PayPal (PYUSD) and JPMorgan (JPM Coin) are launching stablecoins, integrating blockchain technology with traditional banking​.

Src: Techloy

Institutional Adoption and TradFi Integration

The adoption of stablecoins is expanding beyond crypto trading. Traditional finance (TradFi) institutions and fintech companies are integrating stablecoins into payment systems, remittances, and even treasury operations.

1. Banks and Financial Institutions:
   • Standard Chartered and Zodia Markets suggest that stablecoins could eventually comprise 10% of U.S. money supply and foreign exchange transactions, up from the current 1%​.
   • Goldman Sachs has built a digital asset infrastructure, indicating interest in stablecoins pending regulatory approval.
2. Fintech & Payment Giants:
   • Visa’s recent reports indicate stablecoin transactions exceeded $4.7 trillion in monthly volume, signaling widespread commercial use​.
   • Stripe has acquired stablecoin payment platform Bridge, furthering its blockchain-based payment solutions.
3. Corporate and Institutional Usage:
   • Major corporations are using stablecoins for cross-border payments due to their low fees and instant settlement times.
   • Remittance services in emerging markets increasingly rely on stablecoins to bypass high-cost banking infrastructure.

Regulation and Challenges Facing Stablecoins

Stablecoins have become a central focus for regulators worldwide. Their rapid adoption has raised concerns about financial stability, investor protection, and the integrity of payment systems. Governments and central banks are actively shaping policies to address these challenges, while the rise of Central Bank Digital Currencies (CBDCs) presents both competition and collaboration opportunities.

Global Regulatory Approaches

United States: The U.S. is still in the process of defining a clear regulatory framework for stablecoins. Several legislative proposals, including the GENIUS Act and Lummis-Gillibrand Payment Stablecoin Act, aim to clarify how stablecoins should be regulated. The latest executive order from President Trump (January 2025) calls for a federal framework to support legally backed dollar stablecoins, with recommendations expected by mid-year. Meanwhile, states like New York and Wyoming have implemented stricter rules, requiring stablecoins to be fully backed by cash or liquid assets, independently audited, and segregated in separate accounts.

European Union: The EU’s Markets in Crypto-Assets (MiCA) regulation is among the most comprehensive stablecoin laws. Stablecoins are classified as either Asset-Referenced Tokens (ARTs) or E-Money Tokens (EMTs) and must comply with strict reserve, transparency, and governance requirements. Trading platforms were required to delist non-compliant stablecoins by January 2025, with full enforcement expected by the end of Q1 2025.

United Kingdom: The UK is actively developing a stablecoin framework. The Financial Conduct Authority (FCA) and Bank of England are shaping rules to ensure fiat-backed stablecoins meet the same standards as commercial bank money. Stablecoin issuers will need full fiat backing, while overseas stablecoins could be permitted for payments under specific conditions.

Asia and the Middle East:

• Hong Kong proposes a framework for fiat-referenced stablecoins, requiring 100% reserve backing and segregated accounts, along with mandatory monthly attestations.
• United Arab Emirates (UAE) has banned algorithmic stablecoins, requiring all stablecoins to be backed 100% by cash or highly liquid assets, with external monthly audits.

CBDCs vs. Stablecoins

Governments worldwide are developing Central Bank Digital Currencies (CBDCs) as state-backed alternatives to stablecoins. Unlike stablecoins, which are issued by private entities, CBDCs would be directly backed and controlled by central banks. The debate centers on whether CBDCs will replace or coexist with stablecoins.

Proponents argue that CBDCs provide stability, regulatory clarity, and direct government backing. However, critics point out that stablecoins offer greater flexibility, privacy, and innovation potential compared to state-controlled digital currencies. Countries like China, with its digital yuan, are aggressively pushing CBDCs, while the U.S. and EU are still evaluating their potential impact.

Risks Facing Stablecoins

Stablecoins face several risks that regulators are trying to address:

1. Collateralization Concerns: Not all stablecoins maintain a fully transparent 1:1 reserve backing. Some, like USDT, have faced scrutiny over the quality and availability of reserves. Regulations now mandate independent audits and strict reporting standards.
2. Algorithmic Stablecoins: Algorithmic stablecoins like TerraUSD (UST) have collapsed due to flawed designs. Many regulators are now banning algorithmic stablecoins or enforcing stricter requirements for their operation.
3. Centralization Risks: While stablecoins are part of the decentralized finance (DeFi) ecosystem, most are controlled by centralized issuers like Tether and Circle. This raises concerns about censorship, blacklisting, and over-reliance on a few private companies.

With new regulations on the horizon, stablecoins face an evolving landscape that will shape their future role in crypto and traditional finance.

Why Stablecoins Could Be Bigger Than Bitcoin

Bitcoin may be the king of crypto, but stablecoins are the workhorses. While Bitcoin grabs headlines for its price swings and narratives about digital gold, stablecoins quietly move trillions of dollars behind the scenes. They grease the wheels of DeFi, make cross-border payments seamless, and provide a bridge between traditional finance and crypto.

Could stablecoins outgrow Bitcoin in significance? There, I played my final hand. Maybe I quite don’t believe in it myself but this is legit, this could happen.

Stablecoins: The Most Used Crypto Assets

Bitcoin remains the most valuable cryptocurrency, but when it comes to daily usage, stablecoins dominate. According to data from CoinMetrics, stablecoin transactions frequently surpass Bitcoin’s in both volume and transaction count. Tether (USDT), USD Coin (USDC), and DAI collectively process trillions in annual transactions, rivaling traditional payment giants like Visa.

Why? Because people don’t want to spend Bitcoin. They want to hold it, hoping it will reach $100,000 (or $1 million if you ask Michael Saylor). Stablecoins, on the other hand, serve as a transactional currency—used for trading, remittances, payroll, and even daily purchases.

Let’s be honest: Nobody wants to buy a coffee with Bitcoin, only to find out minutes later that they overpaid because the price dipped 5%. Stablecoins eliminate that volatility while keeping all the benefits of crypto.

Bitcoin vs. Stablecoins: Which Has More Real-World Impact?

Bitcoin’s biggest value is as a store of wealth. It’s digital gold, a hedge against inflation, and a financial exit strategy for those in unstable economies. But does it move money efficiently? Not quite.

Stablecoins, on the other hand, do everything traditional fiat can—but faster, cheaper, and with fewer intermediaries. Consider this:

• A cross-border bank transfer takes days and costs up to 5% in fees.
• The same transfer using stablecoins takes minutes and costs pennies.

That’s a game-changer for emerging markets, where traditional banking is slow, expensive, or outright inaccessible. In regions like Latin America and Africa, stablecoins are replacing local currencies as a preferred store of value—not because they’re volatile like Bitcoin, but because they’re more stable than the local fiat.

Even corporations and banks are taking notice. PayPal launched its own stablecoin (PYUSD), Visa integrates USDC for settlements, and JPMorgan is experimenting with blockchain-based payments. Meanwhile, governments are scrambling to issue Central Bank Digital Currencies (CBDCs) in response.

What’s Next for Stablecoins?

The stablecoin race is just beginning. Expect:

• More regulatory clarity—governments will tighten rules, ensuring reserves are transparent and issuers remain accountable.
• New stablecoin types—we’ll see non-USD stablecoins (Euro, Yen, or even commodity-backed stablecoins like gold).
• Stablecoins merging with DeFi—yield-bearing stablecoins could become the new default for savings and payments.

At the rate things are going, stablecoins might not just be bigger than Bitcoin—they might be bigger than traditional banking.

And that’s something even Satoshi might have found amusing.