The killer app for crypto has finally become clear – and it’s stablecoins.
Stablecoins are tokenized cash issued by private institutions on public blockchains (for example, Ethereum), pegged to fiat currency, and backed by audited reserves.
– McKinsey
When the Internet was first coming into prominence, you couldn’t invest directly into the HTTPS (HyperText Transfer Protocol Secure) protocol and just collect a toll. HTTPS runs on top of the internet and the websites you visit are hosted on a specific server. Everything is centralized with the goal of confidentiality and security of data.
Stablecoins are the rare instance where decentralized blockchain technology isn’t just recreating a worse version of existing financial infrastructure. HTTPS doesn’t have a shared global ledger of balances, consensus across multiple parties or the ability to enforce rules automatically using smart contracts. If you want to avoid capital controls in Southeast Asia, buy tokenized versions of real world assets, avoid the fees and clunkiness of the SWIFT network, or execute a smart contract you need stablecoins. And those stablecoins have to be minted on a blockchain.
Why Ethereum? Why now?
The GENIUS Act, passed this summer, reduced legal risk tied to stablecoin issuance and reserve backing for US institutions. The act preserves the US government as regulator but leaves stablecoin issuance to banks, fintechs, and corporates that are fully backed, pegged, and audited. For Wall Street, the race is on to get their piece of the profitable business model pioneered by Tether, Circle and TRON.
Ethereum may be slower and more expensive than alternatives, but it’s compliant with the US government regulations and political goals. It’s fully decentralized with no downtime and approximately 60% of all stablecoins are already issued on Ethereum and its Layer‑2 networks. Ethereum’s support for programmable tokens (ERC‑20) and smart contracts makes it perfect for stablecoins, providing capabilities like minting, redemption, and automated compliance.
The trade
I was early, buying shares and warrants of Ether Capital in 2020 for 40 cents. I’ve never sold and we’re getting close to payday. Aside from buying Ether Capital (since converted to the Purpose Ether Staking ETF) and ETFs a while ago, I’ve structured an options trade that will capture the last parabolic move of this crypto cycle as Ethereum blows past its all-time highs in the next 5-6 months.
Technical analysis is not my area of expertise, but I’ll be selling my Ethereum proxies – options, ETFs, everything – as the ETH price moves through a range of USD$9000-$12000.
