The Post for those (like me) who are "too much of a big deal" to ask what the heck a stablecoin is

If you’re reading this, I’m guessing you’re … kind of a big deal. Me too! Ask anyone who’s never met me. I’m kind of a big deal. Not really, but sometimes I have a tough time finding an open window. Let me explain.

I have had this friend for like 5 years. I’m talking about a good friend. We speak every day. Now, don’t ask me how I got here, but I don’t think she has ever told me where she went to college. I know she did go, I just don’t know where. But after 5 years, I feel like it’s too late to ask. My window has closed.

Many professionals in financial services and other industries believe their window for learning about cryptocurrencies has closed. These folks don’t want to ask their kids to explain it to them. They’re thinking, “I‘ve been an expert litigator for over 20 years, how do I not know about the volatility of $DAI?”

If this sounds like you, you’re not alone. So, no shame and no judgment. Let’s get started with the stuff you’re probably hearing the most about these days. Stablecoins.

Stablecoins 101: A Professional’s Guide to the Future of Money

• THIS POST WILL COVER:

  What are stablecoins?

• Why should you care?

• What are the risks?

• How to learn more without feeling overwhelmed

If the word "cryptocurrency" conjures up images of tech bros, moon emojis, and something your nephew tried explaining at Thanksgiving (unsuccessfully), you’re not alone. But here’s the good news: stablecoins are crypto’s attempt to behave like a responsible adult.

Think of them as the steady friend in your social circle—the one who reminds you to Uber home after two martinis and pays the bill when everyone’s arguing about splitting the check. Stablecoins bring order to crypto chaos, and, dare I say, they might even be useful for financial professionals like you.

What Are Stablecoins?

Let’s break it down. Stablecoins are digital assets that don’t throw temper tantrums on the blockchain. While cryptocurrencies like Bitcoin are about as stable as my Wi-Fi during a Zoom meeting, stablecoins aim to stay rock-solid by pegging their value to real-world assets.

Three Types of Stablecoins:

1. Fiat-Backed: Think digital dollars backed by actual dollars in reserve—like USD Coin (USDC) or Tether (USDT). Basically, they’re the Clark Kent of crypto: dependable, functional, and not prone to sudden changes.

2. Commodity-Backed: Gold, oil, or other tangible assets back these bad boys. If you’ve ever thought, “I wish my crypto was tied to something shiny,” Paxos Gold (PAXG) is for you.

3. Algorithmic: These use complex math to maintain stability. Or at least they try—some have failed harder than my New Year’s resolution to “stop stress-eating potato chips.”

Why Should You Care?

Stablecoins might sound like a tech buzzword, but they’re quietly changing how money works. As a financial professional, it’s worth taking notice before your clients start asking about “USDC” and you accidentally think they’re talking about a new car model.

Here’s why stablecoins matter:

• Faster Payments: Move money across the globe in seconds, without the fees that make your accountant cry.

• DeFi Opportunities: Stablecoins fuel decentralized finance (DeFi), where your clients (or you) can lend, borrow, or invest without calling a bank.

• Safety from Volatility: When the crypto market is a rollercoaster, stablecoins are the seatbelt that keeps your portfolio intact.

What Are the Risks?

No investment is perfect, and stablecoins are no exception. Here are a few things to keep in mind:

1. Regulatory Uncertainty: Governments around the world are cracking down on stablecoins—like recent U.S. executive orders.

2. Transparency Concerns: Not all stablecoin issuers are open about their reserves. Make sure the coin is legit before you invest.

3. De-Pegging Risks: Some stablecoins have lost their peg to the dollar, creating financial chaos.

What Stable Coins should I know about?

Top 10 Trading Stablecoins You Should Know

If you’re curious about which stablecoins dominate the market, here’s a quick list of the heavy hitters and what makes them stand out:

1. Tether (USDT)

   • The OG stablecoin and the most traded. Pegged to the US dollar, it's widely used across exchanges.

2. USD Coin (USDC)

   • Issued by Circle and Coinbase, USDC is known for transparency and frequent audits, making it a favorite among institutions.

3. Binance USD (BUSD)

   • A stablecoin created by Binance in partnership with Paxos, regulated by the NYDFS (New York Department of Financial Services).

4. DAI

   • A decentralized stablecoin governed by the MakerDAO community, backed by a mix of crypto assets.

5. TrueUSD (TUSD)

   • Known for its real-time auditing and regulatory compliance, TUSD is pegged 1:1 to the US dollar.

6. Pax Dollar (USDP)

   • Previously known as Paxos Standard, this stablecoin is issued by Paxos and regulated by NYDFS.

7. TerraUSD (UST)

   • While infamous for its collapse, UST's legacy remains an important lesson in algorithmic stablecoin risks.

8. Neutrino USD (USDN)

   • Backed by the WAVES blockchain, USDN uses an algorithmic mechanism to maintain its peg.

9. Gemini Dollar (GUSD)

   • Issued by the Gemini exchange, GUSD is regulated and insured, providing extra layers of trust.

10. sUSD

• A decentralized stablecoin backed by synthetic assets on the Synthetix platform.

How to Learn More Without Feeling Overwhelmed

Still feeling like you’re drinking from a firehose? No worries—I’ve got you. Here are some resources to ease into the world of stablecoins:

• Coinbase: What is a Stablecoin? – Perfect for a crash course without feeling judged.

• Binance Academy – A treasure trove of beginner-friendly content, because Google searches can only take you so far.

• Podcasts like Unchained – Listen while you drive, clean, or avoid awkward small talk at networking events.

• Books: If you’re old school (respect), pick up "The Bitcoin Standard" by Saifedean Ammous for an entertaining dive into the history of money and crypto.

Final Thoughts

Stablecoins might just be your gateway to understanding the larger cryptocurrency space. They’re more than a tech buzzword—they’re a practical innovation that aligns surprisingly well with the principles of financial stability and efficiency.

Stay curious, stay informed, and take the first step by exploring the resources above. After all, the future of money might not be as scary—or as boring—as it seems.

~ MMT

Michele Tivey is an attorney and a payments industry consultant.