Stablecoins solve a bottleneck in the internet economy. 20th century money is too slow, expensive and frequent for the technology of payments.

This is a pattern that repeats in history.

1. The Industrial Revolution

• The Royal Mint couldn't create coins fast enough
• The shortage led to widespread counterfeits
• The new wage economy demanded more coins
• So factories with high quality machinery made their own
• The Royal Mint accepted this before eventually USING that technology themselves 50 years later

2. The Railroad Boom

• The centralized banking system couldn't provide local capital
• Delaying western expansion and railroad build out
• States passed "free banking" laws
• Local banks set up with reserves at the state
• This was tolerated until the 1860s where national charters and centralized money printing and control

3. The digitization boom

• The NYSE would close every wednesday to catch up with paperwork
• Banks were taking weeks to clear checks
• The USA formed the DTCC to digitize paper stock certificates
• The Automated Clearing House (and BACS) digitized check clearing

The Internet and AI

• Natively global and 247 but money is not
• Money works office hours, is expensive and slow
• Doesn't work for global platforms
• Too expensive for AI Agent micropayments
• Digital cash backed 1:1 by cash equivalents are instant, 24/7 and programmable

Like all of the previous private money innovations, stablecoins are a private sector innovation that is responding to a bottleneck.

I suspect, like others, they'll also become a part of the regulated ecosystem over time as they grow.

Author

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