The Millennial Leap of Currency Forms: From Shells to Code

The history of currency is humanity's eternal exploration of "efficiency" and "trust". From the shell currency of the Neolithic era, to the bronze coins of the Shang and Zhou dynasties, and then to the half-tael coins of the Qin and Han dynasties, each transformation reflects innovation in technology and institutions.

The Northern Song Dynasty's Jiaozi replaced iron coins with paper money, pioneering the era of credit currency. During the Ming and Qing Dynasties, the monetization of silver shifted trust from paper contracts to precious metals. After the collapse of the Bretton Woods system in the 20th century, the US dollar became a purely credit currency, its value no longer reliant on gold but rather tied to national credit.

The emergence of Bitcoin marks a paradigm revolution in trust mechanisms. The stablecoins that followed attempt to replace sovereign credit with algorithmic code, compressing trust into mathematical certainty. This new form of "code as credit" is reshaping the distribution logic of monetary power.

Every transformation of currency forms reshapes the power structure: from the barter system of the Beibei era, to the centralization of metal currency, to the state credit of paper currency, and finally to the distributed consensus of the digital currency era. As the SWIFT system becomes a tool for financial sanctions, the rise of stablecoins has transcended the realm of mere payment tools.

In this digitally fragile era of trust, code is becoming a more solid anchor of credit than gold with mathematical certainty. Stablecoins push this millennia-old game to a new peak: when code begins to write the currency constitution, trust is no longer a scarce resource, but a programmable, divisible, and gamified digital power.

Origins and Budding (2014-2017): The "Dollar Substitute" of the Crypto World

In 2008, Satoshi Nakamoto published the Bitcoin white paper, proposing the concept of decentralized digital currency. In January 2009, the first Bitcoin block was born. Early Bitcoin transactions relied entirely on peer-to-peer networks but lacked standardized pricing and liquidity.

In July 2010, the world's first Bitcoin exchange Mt.Gox was established. However, the trading efficiency was extremely low: bank transfers took 3-5 working days, and the fees were as high as 5%-10%. This inefficiency severely restricted the circulation of Bitcoin.

In 2014, Tether ( USDT ) appeared with the promise of "1:1 pegged to the US dollar", becoming the first "fiat currency substitute" in the crypto world. It broke the barrier between fiat and cryptocurrencies, greatly improving trading efficiency.

In 2017, USDT quickly captured 90% of trading pairs on exchanges due to its seamless connection between traditional finance and the crypto ecosystem, with its market capitalization surging to $2 billion. It sparked a cross-platform arbitrage frenzy, built liquidity bridges, and even became the "digital gold" for some countries to combat inflation.

However, the "1:1 peg" of USDT has always been shrouded in controversy. Its reserve asset composition and transparency have repeatedly raised market doubts. More dangerously, its anonymity has made it a "golden channel" for certain illegal activities.

The root of this trust crisis lies in the deep contradiction between "efficiency first" and "trust rigidity": the code-based "1:1 commitment" attempts to replace sovereign credit with mathematical certainty but falls into the "trust paradox" due to centralized custody and opaque operations. This indicates that the future of stablecoins must find a balance between the ideal of decentralization and the rules of real-world finance.

Barbaric Growth and Trust Crisis (2018-2022): Dark Web, Terrorism, and Algorithm Collapse

The anonymity and cross-border liquidity of cryptocurrency were originally an ideal experiment to combat financial scrutiny, but it has gradually been alienated into a tool for certain illegal activities. By 2018, cryptocurrency crime had formed a complete industrial chain, with the annual amount involved exceeding $100 billion.

Stablecoins have transformed from "payment tools" in the crypto world to vehicles for "dark finance," with a simultaneous arrival of efficiency revolution and trust collapse. After 2018, the anonymity and cross-border liquidity of certain stablecoins have made them a "golden channel" for illegal activities. These events have forced regulators to begin paying attention and issuing relevant guidelines.

The rise and fall of algorithmic stablecoins has pushed the trust crisis to a climax. In May 2022, the collapse of Terra's UST resulted in approximately $18.7 billion in market value evaporating, along with the failure of several institutions. This disaster exposed the fatal flaw of algorithmic stablecoins—their value stability relies entirely on the fragile balance of market confidence and code logic.

The trust crisis of centralized stablecoins arises from the "dark box operations" of financial infrastructure. In 2021, when Tether disclosed its reserve assets, the insufficient cash reserves raised market doubts; in the 2023 collapse of Silicon Valley Bank, USDC's price plummeted due to frozen reserves, revealing the deep binding risks between the traditional financial system and the crypto ecosystem.

In the face of a systemic trust crisis, the stablecoin industry is engaging in self-rescue through over-collateralization defenses and a transparency revolution: DAI constructs a multi-asset collateral system, while USDC implements a "glass box" strategy. The essence of this self-rescue movement is the transformation of cryptocurrencies from the ideal of "code is credit" to a compromise with traditional financial regulatory frameworks.

The future of stablecoins may evolve into a symbiotic game between "regulatory-compliant technology" and "anti-censorship protocols," seeking a new balance between regulatory certainty and innovation uncertainty.

Regulation Assimilation and Sovereign Competition (2023-2025): Global Legislative Race

In June 2025, the United States passed the GENIUS Act, requiring stablecoins to be pegged to USD assets and included in a regulatory framework. Hong Kong subsequently passed the "Stablecoin Ordinance," becoming the first jurisdiction in the world to implement full-chain regulation on fiat stablecoins. This competition is essentially a struggle among sovereign nations for control over currency pricing rights and payment infrastructure in the digital finance era.

The US GENIUS Act requires stablecoin issuers to be registered entities in the United States, with reserve assets needing to be 1:1 matched to US dollar cash or short-term US Treasury bonds. The Act clearly states that stablecoins are not classified as securities or commodities, exempting them from traditional financial regulatory frameworks, while also strengthening anti-money laundering, consumer protection, and bankruptcy liquidation priorities.

The EU MiCA legislation will come into effect at the end of 2024, covering the 27 EU countries and the countries of the European Economic Area. The legislation requires stablecoin issuers to hold at least 1:1 fiat currency or high-liquidity assets through a classification regulatory model, and prohibits the use of user funds for high-risk investments.

Hong Kong's "Stablecoin Ordinance" requires issuers to apply for a license and meet requirements such as high liquidity of reserve assets, segregated management, and redemption at face value. The regulatory scope covers the issuance and promotion activities of HKD-pegged stablecoins both domestically and abroad.

Regulation of stablecoins in other regions of the world shows differentiated paths: countries like Singapore and Japan have established relevant regulations; South Korea and Australia are drafting regulatory frameworks; mainland China prohibits virtual currency trading, but Hong Kong promotes a compliant stablecoin pilot; Russia allows stablecoins for cross-border trade; some countries in Africa and Latin America are more open to stablecoins due to a shortage of US dollars.

The deepening regulation of global stablecoins is reshaping the financial system landscape, with impacts reflected in the reconstruction of financial infrastructure, the struggle for monetary sovereignty, and the transmission of risks within the financial system. In the future, stablecoins may become an alternative infrastructure for CBDCs, but their long-term effects still require ongoing observation.

Now and Future: Deconstruction, Reconstruction, and Redefinition

Looking back at the ten-year journey of stablecoins, we see that it has evolved from a "technical patch" to solve the liquidity crisis in the crypto market, to a "global financial order disruptor" that shakes the status of sovereign currencies. This process is essentially a re-examination of the "nature of money", as humanity's definition of value carriers shifts from "trustworthy physical objects" to "verifiable rules".

The controversy surrounding stablecoins reflects the deep contradictions of the digital age: the game between efficiency and security, the struggle between innovation and regulation, and the ideal of globalization versus the reality of sovereignty. It has become a mirror, reflecting the infinite possibilities of digital finance while exposing humanity's eternal yearning for trust and order.

Looking ahead, stablecoins may continue to evolve in the game between regulation and innovation, becoming the cornerstone of the "new monetary system" in the digital economy era, and may also face another reconstruction amid systemic risks. Regardless, it has profoundly rewritten the logic of monetary history: currency is no longer just a symbol of national credit, but a symbiotic entity of technology, consensus, and power.

In this currency revolution, we are both witnesses and participants. Stablecoins will ultimately become an important beginning for humanity's exploration of a more efficient, fairer, and more inclusive monetary order.