Stablecoins: Retail Payment Savior or Central Bank's Crypto Trojan Horse?

Are stablecoins really the frictionless financial future we’ve been sold, or an elaborate Trojan horse for more centralized power? The solution, I’m afraid, is worse than most people think. While Bitcoin, our digital gold, sits comfortably as a store of value – too slow for everyday transactions, like lugging gold bars to the grocery store – and Ethereum, with its promise of decentralized applications, continues to evolve, stablecoins are quietly gaining ground. At what cost?

Convenience or Control?

Stablecoins offer undeniable convenience. Pegged to assets such as the US dollar, they offer an illusion of stability in the otherwise-volatile world of crypto assets. Second, they promise a transaction speed and cost that is far superior to traditional banking. Who wouldn't want that? This convenience comes with a catch.

Think about it: most stablecoins are issued by centralized entities. These entities, be they private corporations or, increasingly, public central banks, wield the authority to prohibit, censor, and surveil transactions. By doing so, we’re giving them the keys to our financial lives, sacrificing autonomy for illusory security. Picture this — You reluctantly trade-in your favorite, but clunky, mechanical watch. Now, imagine the more fashionable cousin of that device, a smartwatch that tracks your every move and reports it directly back to base. Are you sure you want that upgrade?

The CBDC Trojan Horse

The greatest threat comes from the ability of stablecoins to help accelerate the deployment of Central Bank Digital Currencies (CBDCs). States around the world are understandably keeping a close eye on the ascent of crypto—both in wonder and terror. They see the potential to control the money supply, track every transaction, and even program our spending. Just think how awful it would be if your federal government decided to take away legitimate products you could buy. Or perhaps they could despoil you of access to your money altogether. Sound like science fiction? It's closer than you think.

Stablecoins — especially those issued or centrally controlled like the aforementioned CBDCs — could be the ideal on-ramp for CBDCs. They normalize the idea of digital currencies and educate the public on the technology. When doing so, they establish the basis for centralized control. Instead, we’re being quietly conditioned to accept a heavily surveilled system. Our financial independence is at the mercy of the state’s determination.

Privacy: A Forgotten Luxury?

Let's talk about privacy. In an era of ever-growing surveillance, the ability to move money without prying eyes is a valuable commodity. Bitcoin, as much as it sucks, does give you some pseudonymity. Stablecoins, particularly those issued by centralized entities, provide close to zero. Every strip mall transaction is attached to your personal identity, indefinitely archived and shareable with government and/or corporate entities.

This isn’t solely about preventing taxpayers from knowing how much you spend on what. Defend your freedom of assembly. Protect the First Amendment. Stand up for the causes you believe in and protect your right to dissent without being afraid of financial consequences. Hope not, because do you really want every purchase you make to be subjected to this moralistic decision-making?

We’re led to believe that this amount of surveillance is needed to prevent money laundering and terrorism. When does the quest for security undermine the very liberty it seeks to protect? Are we really ready to trade our privacy for greater convenience? Who should be determining what is and isn’t a “legitimate” transaction in the first place?

The news underscores an important reality — that stablecoins are becoming mainstream, promising to be the future of retail payments. As always, the devil is in the details. Who controls these stablecoins? What are their privacy policies? And if they were widely adopted, what would be the impact?

So don’t be swayed by the allure of frictionless financialization. Ask yourself: are you truly gaining freedom, or are you simply trading one form of control for another? For once, as history has taught us, liberty is lost, it’s nearly impossible to restore. The cost of convenience could be your liberty.