Stablecoin Applications

You learned about stablecoins in Level 1—cryptocurrencies designed to maintain a stable value, usually pegged to the US dollar. But what makes them useful in practice?

The answer lies in combining the speed and accessibility of crypto with the predictability of traditional currency. You get blockchain benefits without the volatility problem.

A designer in Vietnam working for a US company can receive USDC payment in minutes, rather than waiting days for an international wire transfer that loses 5% to fees.

Some merchants accept stablecoins for payment, particularly in regions with unstable local currencies or limited banking access. The merchant gets dollar-equivalent value without currency risk.

In countries experiencing high inflation, holding savings in stablecoins provides dollar-denominated purchasing power without needing a US bank account—which most people can't get.

This isn't about making money. It's about not losing money. When your local currency loses 50% of its value in a year, holding stablecoins is simply preservation.

Of course, this requires trusting the stablecoin issuer and having reliable access to convert back to local currency when needed.

Companies use stablecoins to move money between international offices instantly. Traditional corporate treasury operations involve complex currency management and slow interbank transfers.

Stablecoins enable 24/7 settlement. A company doesn't need to wait for banking hours in multiple time zones to move funds where they're needed.

Not all stablecoins are created equal. The major ones (USDC, USDT) have different backing and transparency practices. USDC publishes regular audits; USDT has been less transparent historically.

Algorithmic stablecoins—those backed by crypto mechanisms rather than actual dollars—have repeatedly failed. The UST/Terra collapse in 2022 erased $40+ billion and showed these designs are risky.