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Crypto’s Killer App? Why Everyone’s Really Into Stablecoins Right Now
@ a16z crypto
05/24/25
Takeaways
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a16z crypto Cast
05/24/25
@ a16z crypto
Stablecoins are networks that gain value as more participants join, but currently, 99% of the nodes are highly regulated, limiting access to the network.
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a16z crypto Cast
05/24/25
@ a16z crypto
The key to unlocking the potential of stablecoins is establishing rules that protect users from failures like FTX, allowing broader participation in the network.
RH
Robert Hackett
05/24/25
@ a16z crypto
Stablecoins have emerged as a promising application in crypto, with the potential to reshape international remittances and point-of-sale payments.
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a16z crypto Cast
05/24/25
@ a16z crypto
The internet has effectively removed intermediaries in many sectors, but the payments and finance sectors remain dominated by traditional systems like Visa, which extract significant fees.
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a16z crypto Cast
05/24/25
@ a16z crypto
Stablecoins can provide a global system of accounts, enabling trustless transactions without relying on traditional banks, which often impose high fees and delays.
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a16z crypto Cast
05/24/25
@ a16z crypto
The current payment infrastructure is outdated, having been established in the 1970s, and needs to evolve to compete with modern blockchain capabilities.
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a16z crypto Cast
05/24/25
@ a16z crypto
Recent advancements in Layer 2 solutions allow crypto payments to be processed in under one second and at a cost of less than one cent, making them competitive with legacy payment systems.
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a16z crypto Cast
05/24/25
@ a16z crypto
Stablecoins are blockchain-based systems that allow users to transact without intermediaries, reducing costs and increasing efficiency in payments.
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a16z crypto Cast
05/24/25
@ a16z crypto
The financial system is regressive, with high fees disproportionately affecting smaller businesses and consumers, while larger corporations negotiate lower rates.
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a16z crypto Cast
05/24/25
@ a16z crypto
The regulatory burden in fintech creates a barrier to entry, allowing established players to maintain high profits while new entrants struggle to compete.
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a16z crypto Cast
05/24/25
@ a16z crypto
Stablecoins can disrupt the current payment model by providing a horizontal layer for building services, enhancing competition and reducing fees in the payment industry.
SB
Sam Broner
05/24/25
@ a16z crypto
Stablecoins can facilitate faster and cheaper transactions, allowing users to earn interest on their funds immediately, unlike traditional banking systems that impose delays and fees.
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a16z crypto Cast
05/24/25
@ a16z crypto
The current financial institutions profit from various fees, including withdrawal fees, which can lead to consumers receiving a poor deal overall.
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a16z crypto Cast
05/24/25
@ a16z crypto
Stablecoins offer a way to bypass the regulatory lock-in that traditional institutions have, enabling more direct and efficient access to financial services.
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a16z crypto Cast
05/24/25
@ a16z crypto
We should all be getting 4% interest on our savings, which is better than inflation and reflects economic growth. Instead, banks like Bank of America, Venmo, or PayPal are sitting on our money and giving us nothing while they profit from it.
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a16z crypto Cast
05/24/25
@ a16z crypto
The first use cases of stablecoin payments are happening now, varying by geography and user demographics. In the US, wealthy users prefer credit cards for their rewards, while payment service providers like Stripe are incentivized to switch to crypto rails to offer better products and higher fees.
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a16z crypto Cast
05/24/25
@ a16z crypto
In lower-income or high-inflation countries, people want to hold stablecoins directly and use them for payments. We need to create a user-friendly experience that integrates stablecoins into existing systems, similar to how Skype allowed users to call landlines from their computers.
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a16z crypto Cast
05/24/25
@ a16z crypto
Stablecoins need to achieve interoperability, allowing users to send stablecoins across different platforms seamlessly. This will create a moment of onboarding similar to what Skype did for video conferencing.
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a16z crypto Cast
05/24/25
@ a16z crypto
The current lack of clear regulation around stablecoins is problematic. Entrepreneurs need bright-line rules to foster innovation while ensuring consumer protection and preventing failures like FTX.
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a16z crypto Cast
05/24/25
@ a16z crypto
Proposed bills in Congress aim to establish clear regulations for stablecoins, requiring them to be fully backed by high-quality, short-term financial products, ensuring users can trust their value.
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a16z crypto Cast
05/24/25
@ a16z crypto
The legislation will also address interoperability across countries, setting a template for global cooperation in stablecoin regulation, which is crucial for the technology's legitimacy.
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a16z crypto Cast
05/24/25
@ a16z crypto
The SEC has clarified that stablecoins used for payments and appropriately backed are not considered securities, which aligns with the proposed stablecoin bills in Congress.
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a16z crypto Cast
05/24/25
@ a16z crypto
The stablecoin business may face challenges as competition increases and interest rates decline. Companies like PayPal are already offering yields on stablecoin holdings, which could impact the market.
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a16z crypto Cast
05/24/25
@ a16z crypto
For innovative businesses, integrating stablecoins can simplify payment processes and reduce reliance on traditional financial institutions, presenting a significant opportunity.
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a16z crypto Cast
05/24/25
@ a16z crypto
The future of stablecoins will depend on regulatory clarity and the ability of banks and fintechs to adapt to new payment infrastructures, which could lead to increased market share for those who embrace the change.
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a16z crypto Cast
05/24/25
@ a16z crypto
The whole point of stablecoins is to remove the ability for investors and entrepreneurs to extract value, which is beneficial for the world and for blockchains.
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a16z crypto Cast
05/24/25
@ a16z crypto
Liquidity has a surprisingly strong network effect; as more people use stablecoins, liquidity deepens and spreads tighten, making it easier to switch between stablecoins without losing value.
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a16z crypto Cast
05/24/25
@ a16z crypto
For stablecoins to gain mainstream adoption, consumers need assurance that one USDC or one PIUSD will always equal one dollar, even in the largest and most complex scenarios.
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a16z crypto Cast
05/24/25
@ a16z crypto
We need to build systems that ensure the true singleness of money, which can be achieved through clearing houses, shared collateral, or regulations combined with well-tuned automated market makers.
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a16z crypto Cast
05/24/25
@ a16z crypto
Blockchains solve not just technical problems but also political ones by enabling parties that don't fully trust each other to agree on transactions in a neutral manner.
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a16z crypto Cast
05/24/25
@ a16z crypto
The growth of stablecoins is remarkable, with the circulating supply nearly doubling in a year, indicating a strong demand for this new financial infrastructure.
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a16z crypto Cast
05/24/25
@ a16z crypto
There's a huge structural demand for U.S. dollars in many parts of the global south, where people prefer to hold their savings in dollars rather than local currencies.
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a16z crypto Cast
05/24/25
@ a16z crypto
The future of stablecoins is uncertain, but widespread adoption will require incentivizing distribution and creating a competitive marketplace built on decentralized networks.
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a16z crypto Cast
05/24/25
@ a16z crypto
Stablecoins represent a significant evolution in the financial system, allowing for new products and services that were previously too complicated or costly to implement.
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a16z crypto Cast
05/24/25
@ a16z crypto
The programmability of stablecoins enables innovative payment solutions, such as streaming payments, where users can pay for services on a day-by-day basis instead of in bulk.