Important note: This content is strictly educational .

Often we speak of digital currencies, crypto, bitcoin and stablecoins. But how do they compare? For now we focus on bitcoin and stablecoins. While both are key players, they serve completely different purposes.

To get insights on the difference between stablecoins and bitcoin, I spoke with bitcoiner and nostr expert Jordi Llonch Esteve for a true bitcoiner perspective on the topic.

What Are Stablecoins?

Stablecoins are digital tokens pegged to the value of fiat currencies, like the US dollar or Euro. Think of them as casino chips; representations of real money that are easier to use in certain environments. Their goal is to provide stability in a volatile crypto market. They are useful for quick transactions or as a bridge between traditional finance and digital assets. However, they rely on third-party issuers and reserves, which introduces layers of trust and risk.

But here’s the catch: stablecoins aren’t truly “stable.” They’re only stable relative to the fiat currency they’re pegged to, which itself can lose value over time due to inflation. So, while $1 might always equal 1 USDT (a popular stablecoin), the purchasing power of that dollar can decrease.

That’s why I don’t like the term stablecoin. They are pegged-coins; tokens that live on a private network.

Bitcoin: The Scarce Digital Asset

Bitcoin, on the other hand, is fundamentally different. It’s not just another currency. It’s a decentralized form of money with a fixed supply of 21 million coins. Unlike fiat or stablecoins, Bitcoin isn’t controlled by any government or company. Its scarcity and decentralized nature make it a unique store of value.

Some say that Bitcoin is real money because it’s immune to inflation and free from the risks associated with centralized control. However, its price volatility and steep learning curve can make it intimidating for newcomers.

Do Stablecoins Compete with Bitcoin?

Not really. Comparing Bitcoin to stablecoins is like comparing apples to buildings. Each of them serve different purposes. Stablecoins are more like credit or tokens for short-term transactions, while Bitcoin is designed to be a long-term store of value and a hedge against inflation.

Can stablecoins slow Bitcoin’s adoption?

In the short term, yes. People often go to what feels familiar, and stablecoins resemble traditional money. But as more people learn about Bitcoin’s unique properties, like its ability to preserve value over time, they may start to see its advantages.

The Risks of Stablecoins

One major downside of stablecoins is their reliance on trust. You have to trust the issuer to actually hold reserves and maintain the peg to fiat currency. Plus, there are multiple layers involved. From the company issuing the token to the central bank managing the underlying fiat currency. Each layer introduces potential points of failure.

Final Thoughts

Both Bitcoin and stablecoins have their place in today’s economy. Stablecoins offer convenience for transactions, especially in underbanked regions. But if you’re looking for a way to preserve value over time without relying on third parties, Bitcoin is in a league of its own.

Understanding these differences is key to making informed decisions in the world of digital assets. Want to dive deeper? Jordi recommends checking out books like Broken Money by Lyn Alden or exploring the work of Professor Richard Werner. They’re excellent resources for understanding the history of money.

Jordi on Nostr https://tinyurl.com/ypkpsths

Talk Satoshi to Me on Nostr https://tinyurl.com/hyvh7zhr

#studybitcoin #bitcoinversusstablecoins #digitalgold #bitcoinadoption #historyofmoney

** Photo by Kanchanara on Unsplash

This blog post is strictly educational and for general information only. Readers are encouraged to conduct their own research and consult a professional before making any investment decisions.

Disclaimer: This blog post is authored by Marilyn as a continuance of her education and passion ignited during the Bitcoin Talents Program at Frankfurt School of Finance & Management. The insights and opinions shared here aim to inform and engage the public.

Important note: This content is strictly educational .

Often we speak of digital currencies, crypto, bitcoin and stablecoins. But how do they compare? For now we focus on bitcoin and stablecoins. While both are key players, they serve completely different purposes.

To get insights on the difference between stablecoins and bitcoin, I spoke with bitcoiner and nostr expert Jordi Llonch Esteve for a true bitcoiner perspective on the topic.

What Are Stablecoins?

Stablecoins are digital tokens pegged to the value of fiat currencies, like the US dollar or Euro. Think of them as casino chips; representations of real money that are easier to use in certain environments. Their goal is to provide stability in a volatile crypto market. They are useful for quick transactions or as a bridge between traditional finance and digital assets. However, they rely on third-party issuers and reserves, which introduces layers of trust and risk.

But here’s the catch: stablecoins aren’t truly “stable.” They’re only stable relative to the fiat currency they’re pegged to, which itself can lose value over time due to inflation. So, while $1 might always equal 1 USDT (a popular stablecoin), the purchasing power of that dollar can decrease.

That’s why I don’t like the term stablecoin. They are pegged-coins; tokens that live on a private network.

Bitcoin: The Scarce Digital Asset

Bitcoin, on the other hand, is fundamentally different. It’s not just another currency. It’s a decentralized form of money with a fixed supply of 21 million coins. Unlike fiat or stablecoins, Bitcoin isn’t controlled by any government or company. Its scarcity and decentralized nature make it a unique store of value.

Some say that Bitcoin is real money because it’s immune to inflation and free from the risks associated with centralized control. However, its price volatility and steep learning curve can make it intimidating for newcomers.

Do Stablecoins Compete with Bitcoin?

Not really. Comparing Bitcoin to stablecoins is like comparing apples to buildings. Each of them serve different purposes. Stablecoins are more like credit or tokens for short-term transactions, while Bitcoin is designed to be a long-term store of value and a hedge against inflation.

Can stablecoins slow Bitcoin’s adoption?

In the short term, yes. People often go to what feels familiar, and stablecoins resemble traditional money. But as more people learn about Bitcoin’s unique properties, like its ability to preserve value over time, they may start to see its advantages.

The Risks of Stablecoins

One major downside of stablecoins is their reliance on trust. You have to trust the issuer to actually hold reserves and maintain the peg to fiat currency. Plus, there are multiple layers involved. From the company issuing the token to the central bank managing the underlying fiat currency. Each layer introduces potential points of failure.

Final Thoughts

Both Bitcoin and stablecoins have their place in today’s economy. Stablecoins offer convenience for transactions, especially in underbanked regions. But if you’re looking for a way to preserve value over time without relying on third parties, Bitcoin is in a league of its own.

Understanding these differences is key to making informed decisions in the world of digital assets. Want to dive deeper? Jordi recommends checking out books like Broken Money by Lyn Alden or exploring the work of Professor Richard Werner. They’re excellent resources for understanding the history of money.

Jordi on Nostr https://tinyurl.com/ypkpsths

Talk Satoshi to Me on Nostr https://tinyurl.com/hyvh7zhr

#studybitcoin #bitcoinversusstablecoins #digitalgold #bitcoinadoption #historyofmoney

** Photo by Kanchanara on Unsplash

This blog post is strictly educational and for general information only. Readers are encouraged to conduct their own research and consult a professional before making any investment decisions.

Disclaimer: This blog post is authored by Marilyn as a continuance of her education and passion ignited during the Bitcoin Talents Program at Frankfurt School of Finance & Management. The insights and opinions shared here aim to inform and engage the public.