I am going to start with a question:
@taskmaster4450le/re-leothreads-2mhie716w
Whether this is much validation or not, it is good to see some of what we discuss reaching the mainstream. We know crypto is shaping up to be a political hot topic, so we can expect more comments on it going forward.
Here is an article discussing how tens of trillions in stablecoins will be needed. We also have the idea of the stablecoin market seeing a 100x.
We now have the former Speaker of the House, Paul Ryan, echoing the same idea.
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Trillions In Stablecoins
Of course, Ryan feels that regulation is necessary. This is no surprise since he is an establishment person. However, this does not take away from the message.
The reality of the situation is stablecoins are becoming more popular by the day. We know the market is dominated by Tether and USDC. There is a lot of room for other coins to step in.
Ryan noted how the asset based stablecoins actually help the United States since the backing is done, for the most part, with US Treasuries. This creates buy demand as the companies behind the issuance of the coin use the dollars to by treasuries, garnering the interest payments as profit.
Many feel this will be the foundation for the decentralized finance (DeFi) space.
On this point, I agree with Ryan.
We will likely see trillions of dollars in stablecoins that are backed by US Treasuries. It is an easy way to circulate the "dollar" and give anyone access to it. Naturally, this is something that goes against the view of many in power, since they want full KYC and AML. The abovementioned tokens fulfill that.
Algorithmic Stablecoins
To me, a bigger part of the future is algorithmic stablecoins.
While I will cede the asset backed version is going to be huge, it will be eclipsed in size and volume. It is important to mention we are going to be dealing with tens of trillions in stablecoins. This means that we are going to need a massive jump in the amount available.
There are two things that feed into this conclusion.
The first is the massive potential of artificial intelligence and the impact upon the economy. If people like Cathie Wood are right, and we see growth rates of the global economy of near 10% by the end of the decade, that will necessitate a great deal more currency.
Another is tied to this idea. It is the fact we are going to see even higher growth rates in the digital world. Bits are easier than atoms which is why the historical numbers match this idea.
As we head towards the metaverse, even if the concept is still a long way off, we are going to see virtual economies in the trillions forming. What do you think will fuel this, i.e. be the currency? We are not going to see it facilitated by Visa or through one's traditional bank account.
Exponential Economy
It is likely we encounter a time, in the not too distant future, where we see an exponential economy.
The idea here is that technology spread out to such a degree that not only are business realizing exponential gains, it is the entire economy itself.
My view is that stablecoins will be the mechanism fueling a large part of this. While the traditional world could still favor the common payment and funding avenues, cryptocurrency, along with other aspects of DeFi, are going to take over.
The rate of advancement of AI, specifically compute, provides insight into what we might be seeing. From this perspective, we can see how a baseline forms with a rather high growth rate. Even if this slows down into the 20%-25% annually (as compared to an estimated 100% every 6 months), it will be a massive driver of economic growth.
Then we take into account all that is build upon it.
Here is all reverts back to what is being build and the economic productivity that is created. If Web 3.0 forecasts are accurate, we are going to be looking at tens of trillions in output on top of what we already have.
Stablecoins will play a major roll in the payment and funding system.