The history of money is an eternal quest and game of "efficiency" and "trust" for humanity. From the cowrie shells in the Neolithic Age, which established value consensus through natural scarcity, to the bronze coins in the Shang and Zhou dynasties (such as copper shells) that embedded the mark of power into the form of currency; from the half-tael coins in the Qin and Han dynasties that unified the currency system with a round shape and square hole, to the Jiaozi in the Tang and Song dynasties that broke through the circulation shackles of metal currency with paper, each leap in form is a resonance of technological breakthrough and institutional innovation.

When the Jiaozi in the Northern Song Dynasty replaced iron coins with paper, solving the circulation dilemma of "a thousand coins weighing a hundred catties," it was not only a material innovation but also the prototype of credit currency: the Jiaozi jointly issued by wealthy merchants, established a credit anchor through "a thousand boxes of copper coins in reserve." The monetization of silver in the Ming and Qing dynasties shifted trust from paper contracts to precious metals. After the Bretton Woods system collapsed in the 20th century, the US dollar reconstructed global hegemony as a pure credit currency: the value of the dollar, decoupled from gold, was no longer dependent on physical precious metals but was tied to US Treasury bonds and military hegemony. This "credit hollowing" model completely shifted monetary power from physical anchors to national credit. When Bitcoin, with its daily fluctuation of more than 10%, tore apart the traditional financial system, the rise of stablecoins marked a paradigm revolution in the trust mechanism: USDT's claimed "1:1 US dollar peg" is essentially replacing sovereign credit with algorithmic code, compressing trust into mathematical certainty. This new form of "code as credit" is rewriting the logic of monetary power distribution - from the seigniorage privilege of sovereign states to the consensus monopoly of algorithm developers.

Each transformation of currency form reshapes the power structure: the barter trust dependence in the cowrie shell era, the centralization endorsement in the metal currency era, the national credit enforcement in the paper currency era, and the distributed consensus in the digital currency era. When USDT is criticized as a "digital Ponzi scheme" due to reserve controversies, and the SWIFT system becomes a cold tool for financial sanctions in political games, the rise of stablecoins has long surpassed the category of "payment tools." It is not only a leap in payment efficiency but also reveals the prelude to the quiet shift of monetary power from sovereign states to algorithms and consensus: in this digital age of fragile trust, code is becoming a harder credit anchor than gold with mathematical certainty. Stablecoins will eventually push this millennium-long game to its end: when code begins to write the monetary constitution, trust is no longer a scarce resource but a programmable, divisible, and negotiable digital power.

Chapter 1: Origins and Sprouts (2014-2017): The "US Dollar Surrogate" in the Crypto World

In 2008, Satoshi Nakamoto published the "Bitcoin Whitepaper," proposing a decentralized digital currency concept based on blockchain technology. On January 3, 2009, the first Bitcoin block (the genesis block) was mined, marking the official birth of Bitcoin. In its early days, Bitcoin transactions entirely relied on peer-to-peer (P2P) networks, with users directly exchanging keys through local wallets to complete transfers, but they lacked standardized pricing and liquidity.

In July 2010, the world's first Bitcoin exchange, Mt. Gox, was established, allowing users to purchase Bitcoin via bank transfer for the first time. However, the transaction efficiency at this stage was extremely low: bank transfers took 3-5 business days to arrive, with handling fees as high as 5%-10%, and there were exchange rate losses between different countries. For example, if a US user wanted to buy Bitcoin worth $1,000, they would first have to remit money to Mt. Gox's offshore account, and only after the bank clearance could they obtain Bitcoin, a process that might take more than a week. This inefficient payment system severely restricted the liquidity of Bitcoin, keeping it confined to the "small circle" of tech geeks and early enthusiasts. Moreover, due to the lack of regulation and hacker attacks, it declared bankruptcy in February 2014, known as the "Mt. Gox" incident. After 2022, global compliant exchanges began to emerge, with US-based Coinbase and Hong Kong-based Hashkey leading the way in providing compliant and secure trading services for global customers.

By 2014, Bitcoin's market value had exceeded $10 billion, but the shackles of traditional bank transfers remained unbroken. As users waited for Bitcoin to arrive on Mt. Gox, Tether (USDT) emerged with the promise of "1:1 US dollar peg" - it was like a sharp scalpel, cutting through the barriers between fiat currency and cryptocurrency, becoming the first "fiat surrogate" in the crypto world. Tether (USDT) was launched in 2014 by Tether Limited, initially named "Realcoin," founded by Brock Pierce, Reeve Collins, and Craig Sellars in Santa Monica, and issued the first batch of tokens through the Omni Layer protocol on the Bitcoin blockchain. In November of the same year, it was renamed Tether, claiming that for every $1 USDT issued, an equivalent amount of US dollar assets would be reserved, aiming to provide a stable-value cryptocurrency trading medium. Its parent company, iFinex Inc., also operates the cryptocurrency exchange Bitfinex, a connection that has sparked controversy. Early academic research questioned the association between Tether issuance and Bitcoin price manipulation (for example, Griffin and Shams pointed out that during market downturns, the issuance of USDT was accompanied by an increase in BTC prices), but subsequent studies denied a direct causal relationship, considering it a normal market reaction to liquidity news. After years of development, Tether has expanded to multiple blockchains (such as Ethereum, Tron, etc.) and supports various fiat-pegged versions. As of June 2025, the total circulation exceeded $150 billion, but its reserve transparency and compliance still face ongoing regulatory scrutiny and market skepticism.

USDC (USD Coin) is a US dollar stablecoin launched in September 2018 by the Centre Consortium, jointly established by the US fintech company Circle and Coinbase. Initially pegged 1:1 to the US dollar and issued based on the Ethereum ERC-20 protocol, its original intention was to provide a transparent and compliant fiat-pegged tool for the cryptocurrency market. It gradually expanded its influence through the Coinbase exchange and Circle's payment network. In March 2021, Visa announced support for USDC as a settlement currency, marking its formal entry into the mainstream financial payment system. In September of the same year, USDC announced that its reserve assets would fully shift to high-liquidity statutory instruments such as cash and short-term US Treasury bills, completely detaching from the cryptocurrency collateral model, reinforcing its credibility of "full fiat reserve." As of January 2022, the circulation of USDC reached $45.2 billion, once surpassing USDT to become the world's largest stablecoin. After the FTX collapse in 2023, the cash proportion in USDC reserves increased from 80% in 2022 to 93% in 2024 to enhance market confidence. Technically, USDC has gradually expanded to multiple chain ecosystems such as Algorand and Solana, and strengthened its compliance layout through acquisitions such as Paxos. Despite a brief depegging event in 2023 that raised doubts, its close cooperation with regulatory authorities (such as the US SEC review finding no significant violations) still makes it a representative of institutional stablecoins, continuously promoting the integration of the crypto economy and traditional finance. Circle went public on June 5, 2025, and has risen sixfold in just ten days.

By 2017, USDT, with its seamless connection between traditional finance and the crypto ecosystem, quickly occupied 90% of the trading pairs on exchanges, with its market value soaring from a few million dollars to $2 billion. It sparked a frenzy of cross-platform arbitrage: traders shuttled between Binance and Huobi, leveraging USDT's second-level settlement to complete dozens of price difference trades in a single day, an efficiency a hundred times higher than the SWIFT system; it built a bridge of liquidity: in 2017, the on-chain trading volume of USDT exceeded $100 billion, accounting for 40% of Bitcoin's trading volume, even attracting Standard Chartered Bank to complete the first cryptocurrency salary disbursement for an African mining company through USDT; it also became the "digital gold" of countries with hyperinflation: in Argentina, the black market USDT premium rate once reached 30%, with the public viewing it as a "last line of defense" against local currency depreciation. However, beneath the prosperous facade, cracks in trust were quietly spreading.

USDT's "1:1 peg" has always been shrouded in a black box of doubt: in 2015, Bitfinex was hacked and 1,500 BTC were stolen, and in 2016, another 120,000 BTC were stolen. Since Bitfinex and USDT are both managed and operated by their parent company iFinex Inc., they are commonly perceived as sibling companies. In 2018, Tether first disclosed its reserve assets, with cash accounting for 74%. In a controversial event in 2021, the cash ratio plummeted to 2.9%, with the remainder being commercial paper and reverse repurchase agreements, raising market doubts about its solvency. More dangerously, its anonymity made it a "golden channel" for the dark web: in 2016, the USDT transaction volume seized from Silk Road 2.0 reached $42 million, accounting for 1.2% of its circulation; in 2017, a US SEC investigation showed that at least 12% of exchange OTC transactions involved money laundering - stablecoins had become an "invisible pipeline" for the flow of criminal funds.

The root of this trust crisis is the deep contradiction between "efficiency first" and "trust rigidity": the coded "1:1 promise" attempts to replace sovereign credit with mathematical certainty, but due to centralized custody and opaque operations, it falls into a "trust paradox" - when users discover that USDT's reserve funds are actually deposited in Deutsche Bank's offshore branch and can be arbitrarily called upon by the issuer, its claimed "rigid redemption" instantly becomes a digital illusion. This foreshadows the ultimate proposition that stablecoins must answer in the future: how to find a balance between the ideal of decentralization and the reality of financial rules?

Chapter 2: Unbridled Growth and Trust Crisis (2018-2022): Dark Web, Terrorism, and Algorithmic Collapse

When Bitcoin emerged in 2009 with its decentralized ideal, no one could foresee how it would transform into the "black gold" of the digital age. The anonymity and cross-border liquidity of early cryptocurrencies were originally intended as a utopian experiment to combat financial censorship, but gradually became the "digital Swiss bank" for criminals. Dark web markets were the first to smell the business opportunity: Silk Road 2.0 traded drugs and firearms with Bitcoin, and Monero, due to its complete anonymity, became the preferred payment tool for ransomware. By 2018, the cryptocurrency crime industry had formed a complete chain - a closed loop of hacking, money laundering, and kidnapping for ransom, with annual case amounts exceeding $100 billion.

Stablecoins, which evolved from being a "payment tool" in the crypto world to a carrier of "dark finance," saw the simultaneous arrival of the efficiency revolution and the abyss of trust collapse. After 2018, the anonymity and cross-border liquidity of stablecoins like USDT made them the "golden channel" for criminal activities: in 2019, the US Department of Justice accused the North Korean hacking group Lazarus of laundering over $100 million through USDT, with funds hidden between Philippine casinos and Dubai cryptocurrency exchanges; in 2020, Europol cracked a case where ISIS used stablecoins to raise $500,000 in cross-border funds, with the funds completing the entire process of "whitening - transfer - deployment" through the TornadoCash mixer. These incidents forced FATF to release the "Risk-Based Approach Guidance for Virtual Assets and Virtual Asset Service Providers" in 2021, requiring virtual asset service providers to implement KYC and AML reviews, but the lag in regulation反而催生了更复杂的规避手段——犯罪团伙利用虚拟资产服务商牌照漏洞，通过“稳定币-混币器隐私币”三级跳完成资金隐匿。

The rise and fall of algorithmic stablecoins pushed the trust crisis to its climax. In May 2022, Terra's UST, an algorithmic stablecoin, depegged due to a liquidity crisis. Its collapse mechanism was a "perfect storm": it attracted users to stake Luna and mint UST with high-interest staking (20% annualized). When market panic triggered a sell-off, the algorithm forcibly burned Luna to maintain the peg, but the overwhelming selling pressure led to an infinite minting of Luna. The UST collapse wiped out approximately $18.7 billion in market value, causing 3AC, Celsius, and other institutions to fail, and the DeFi market value shrank by 30% in a single week. This disaster exposed the fatal flaw of algorithmic stablecoins—their value stability entirely depends on the fragile balance of market confidence and algorithmic logic. When the panic index exceeds a critical point, the mathematical model instantly becomes a "death countdown timer."

The trust crisis of centralized stablecoins stems from the "black box" operations of the financial infrastructure. In 2021, when Tether disclosed its reserve assets, the insufficient cash reserves raised doubts about its solvency. In 2023, during the Silicon Valley Bank collapse, USDC's price temporarily fell to $0.87 due to the freezing of $5.3 billion in reserves, revealing the deep integration risks between the traditional financial system and the crypto ecosystem. These events forced the industry to re-examine the nature of trust: when users discovered that USDT's reserve funds were actually deposited in Deutsche Bank's offshore branch and could be arbitrarily called upon by the issuer, its claimed "1:1 rigid redemption" instantly became a digital illusion.

In response to the systemic trust crisis, the stablecoin industry launched a self-rescue movement through over-collateralization and transparency revolution. DAI built a multi-asset collateral system (ETH, WBTC, etc.), anchoring the collateralization rate threshold at 150%. During the 2022 Luna collapse, it resolved over $20 billion in risks through smart contract liquidation mechanisms, and its market value grew by 60% against the trend, verifying the resilience of the decentralized collateral model. USDC adopted a "glass box" strategy, publishing reserve reports audited by BNY Mellon every month (cash ratio increased from 52% in 2021 to 80% in 2023), and leveraging blockchain browsers to track the flow of reserve funds in real time. During the SVB crisis, it became the first choice for institutional funds to hedge risks, with its market value exceeding $50 billion. The essence of this self-rescue movement is the transition of cryptocurrency from the utopia of "code as credit" to the traditional financial regulatory framework—when 72% of DAI's collateral assets depend on centralized custody and USDC accepts the Federal Reserve's "window guidance" on Treasury reserve, the contradiction between technological idealism and institutional realism is highlighted: algorithmic stablecoins trigger death spirals due to market panic (e.g., UST's market value evaporated $40 billion), exposing the fragile balance between mathematical models and financial reality. Meanwhile, the new regulatory paradigm and the codification of sovereign credit suggest that the future of stablecoins may evolve into a coexistence game between "regulation-compatible technology" and "anti-censorship protocols," seeking a new balance between the regulatory determinacy of quantum entanglement (wave function collapse) and the innovation uncertainty (superposition state).

Chapter 3: Regulatory Enlistment and Sovereign Games (2023-2025): The Global Legislative Race

On June 17, 2025, the US Senate passed the "Guidance and Establishment of the US Stablecoin National Innovation Act" (referred to as the GENIUS Act) with 68 votes in favor, requiring stablecoins to be pegged to US dollar assets and incorporated into the Federal Reserve's regulatory framework. Just two days later, the Hong Kong Legislative Council passed the "Stablecoin Ordinance" at its third reading, becoming the first jurisdiction globally to implement full-chain regulation of fiat-pegged stablecoins. The essence of this competition is the ultimate contest between sovereign states in the digital financial era for monetary pricing power and control over payment infrastructure.

The US GENIUS Act, the "Stablecoin Innovation and Guidance Act of 2025," was passed by the Senate on June 17, 2025, with a 68-30 vote, becoming the first federal-level regulatory framework for stablecoins in the United States. This marked the formal incorporation of stablecoins into the national financial regulatory system. The bill requires stablecoin issuers to be US-registered entities, with reserve assets matching 1:1 with highly liquid assets such as US dollar cash or short-term US Treasury bills. It establishes a dual-track regulatory mechanism: issuers with a market value exceeding $10 billion must accept federal regulation (Federal Reserve/OCC), while those below this threshold may choose state-level regulation. The bill explicitly states that stablecoins are neither securities nor commodities, exempting them from the traditional financial regulatory framework. It also strengthens anti-money laundering (AML), consumer protection, and priority in bankruptcy liquidation, stipulating that coin holders' rights take precedence over other creditors. Its core significance lies in consolidating the digital hegemony of the US dollar through a compliance path, attracting global stablecoin resources to flow into the US market,