Most people think the role of stablecoins in U.S. consumer payments will only ever be a backend settlement tool to make credit cards more efficient. But I think they can replace cards altogether.
They can do that by following the same two-step path Visa used to achieve mainstream adoption: (1) lean into intrinsic advantages to solve real pain points for specific users, and (2) build or participate in an open network that aggregates fragmented usage into a scalable, interoperable system.
Step One: Start with niche use cases by leaning into intrinsic advantages.
Credit cards overcame the bootstrapping problem by focusing first on intrinsic features — convenience, incentives, and increased sales — that didn’t require a fully built network. Stablecoins can do the same by finding early traction in two niches:
- Comparative convenience: For consumers in jurisdictions with restricted USD access (e.g., LATAM), stablecoins offer uniquely convenient access to U.S. merchants, enabling previously impossible sales.
- Incentive-first use cases: Whitelabeled stablecoins can power rewards programs, with merchants offering discounts and perks funded by yield on the float. Consumers are often willing to tolerate onboarding friction for products they love if the rewards are strong and the value is likely to be reused (e.g., Starbucks Rewards, Taylor Swift fans, or Poshmark users).
Step Two: Aggregate fiefdoms into a full-blown network.
As in the early credit card era, leaning into niche use cases will lead to fragmentation — varied chains, issuers, user experiences, and standards around consumer protection. Over time, these fiefdoms will need to be connected through a neutral, interoperable network, a “Visa for stablecoins.”
Stablecoins won’t dethrone cards by competing head-on. They’ll get there by serving edge cases first, then stringing those edges together. This will aggregate the supply and demand necessary to solve the bootstrapping problem of a new payment method. From a new consumer’s standpoint, joining the stablecoin world will eventually offer enough value that the one-time onboarding pain becomes worth it. At that point, stablecoins won’t be seen as an alternative to credit cards. They’ll be seen as the inevitable successor.
Read the full piece for my detailed argument, including:
- The similarities between Visa’s early history and our present moment
- Why merchants would choose whitelisted stablecoins over traditional rewards programs
- How customers weigh convenience and incentives
https://variant.fund/articles/string-it-together-how-stablecoins-go-mainstream/
