Are Stablecoins Eurodollars 2.0? Long Reads Sunday

The Breakdown

Blockworks

Investing, Business

4.8 • 786 Ratings

🗓️ 19 July 2020

⏱️ 15 minutes

🔗️ Recording | iTunes | RSS

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Summary

On this week’s Long Reads Sunday, we look at two essays about stablecoins previously published on CoinDesk. The first is called “USD Stablecoins Are Surging, but Zero Interest Rates Complicate Business Model” by Hasu and was one of the first pieces to recognize that demand was coming not just from the crypto space but from emerging markets facing crisis time currency pressures. The second is “Hyper-Stablecoinization: From Eurodollars to Crypto-Dollars” from Pascal Hügli. The piece argues that stablecoins are likely to play an increasingly important role in the global economy. In effect, they are a better version of the critical eurodollar system.

Transcript

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0:00.0	Welcome back to the breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond.
0:13.5	This episode is sponsored by BitStamp and Crypto.com.
0:18.0	The breakdown is produced and distributed by CoinDes. And And now here's your host, NLW.
0:28.1	Welcome back to The Breakdown, guys. It is Sunday, July 19th, and that means that it is Long
0:33.4	Reads Sunday. One of the most common themes on the breakdown is the role of the dollar in the world.
0:41.0	Just this week we had John Turrick talking about how the dollar might for the time being be a
0:46.7	solved problem. Well, I want to explore a dimension of this that has to do with crypto dollars,
0:52.4	and I want to do it with a tiny little bit of recent historical
0:55.4	context. This year has been a breakout year for USD stablecoins. And so I'm going to start with
1:02.6	an essay by Hasu from CoinDesk that was published on March 30th about stable coins. It was one of the
1:09.6	first to assess what might be driving demand in a
1:13.0	different way, and then follow it up with a new essay called Hyperstablecoinization by Pascal
1:18.8	Hugley that just published on July 12th. I think together they give a really good portrait of
1:24.4	the evolution of this space over just the last three months.
1:34.3	March 30th, 2020, U.S.D. stable coins are surging, but zero interest rates complicate business model. The last 30 days have been historic by any meaning of the word. The coronavirus is shaking
1:40.1	up life as we know it and has already caused unprecedented dislocations in both the traditional
1:44.6	financial markets and the crypto market. In the center of this financial turmoil was the U.S.
1:49.1	dollar, which saw a flight to safety from many different assets, including ones deemed safe
1:53.6	by traditional investors. As I write this article, the S&P 500 is down 20% against the dollar in 2020,
1:59.9	crude oil down 62%, the British pound down 9%, and
2:03.9	both the Russian ruble and the Brazilian Real are down 25% respectively. While the crypto markets have
2:09.0	been insulated from the markets at large for a long time, this is no longer the case, now that
	...

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