Let's start with a very simple question: if the internet has made the exchange of information free and global, why is it so complicated and expensive to move more or less large sums of money?
Today, the global financial system resembles a mosaic of centralized, closed, and predatory corporate networks. Behind every transaction lies a hellish machine of intermediaries: points of sale, payment processors, acquiring banks, issuing banks, local banks, correspondent banks, currency exchanges, card networks, and more. Each takes a percentage, adds delays, and imposes rules. These networks impose unnecessary taxes on commerce and hinder innovation. They transform what should be a neutral infrastructure into high-friction bottlenecks. Even today, international remittances (money sent by a worker to their country of origin) can cost up to 10% in fees. These are not just points of friction; they are, in fact, taxes that affect some of the poorest workers in the world. The system we have inherited is slow, opaque, and exclusive, leaving billions of people underserved or completely excluded from the global financial system. These inefficiencies not only affect individuals but also all companies that use traditional payments to settle international transactions. B2B payments from Mexico to Vietnam take 3 to 7 days to clear and can cost between $14 and $150 for every $1,000 transferred, passing through up to five intermediaries, each taking a commission.
Undoubtedly, the current financial system has helped to increase capital oversight, allowing for careful monitoring and preventing money laundering, fraud, and tax evasion. Undoubtedly. Undoubtedly, it is not going very well. The small, defenseless worker is sacrificed, while large speculators have infinite resources available to make their earnings and investments efficient to the last cent.
The world is full of such examples; I will cite a few only for the sake of brevity, but the extent of the injustice is so great and so ignored that any effort to list them makes little sense. I am thinking of the Panama Papers and subsequently the Pandora Papers scandals, which highlighted how heads of state, entrepreneurs, celebrities, and multinational corporations have systematically used offshore companies to conceal assets and evade taxes. When they cannot simply access tax havens like Ireland. Tax evasion on a global scale amounts to trillions of dollars a year, depriving public budgets of fundamental resources for essential services such as healthcare, education, and infrastructure. According to some OECD estimates, avoidance and evasion by large tech and pharmaceutical companies cost member states over $100 billion a year. Added to this are tax and accounting frauds, often facilitated by the complicity of professionals in the banking, legal, and financial sectors. The Wirecard case, for example, saw one of the largest German fintech companies inflate its balance sheets by billions of euros until its collapse, under the complacent gaze of auditors and authorities. Another emblematic case is that of Enron, which manipulated its accounts for years with the collaboration of the auditing firm Arthur Andersen, causing one of the most devastating bankruptcies in American history. A more recent example is the failure of Silicon Valley Bank (SVB) in 2023, a bank considered the financial heart of US tech startups. This was not a classic fraud, but rather yet another demonstration of how greed and the absence of effective regulation can lead to sudden collapses: unbalanced asset management, lack of hedging on interest rate risks, and clumsy communication that triggered a bank run. SVB, despite operating in a highly supervised context, managed to accumulate systemic risks that shook the entire tech ecosystem and required an emergency intervention by the authorities. In Italy, cases like Parmalat, with a €14 billion hole, or the collapse of cooperative banks and institutions such as Banca Etruria or Monte dei Paschi di Siena, still show how fraud and reckless management can go unnoticed for years, even in the presence of regulatory bodies and internal controls.
All these examples highlight an uncomfortable truth: the mechanisms theoretically designed to control and prevent abuses often fail, or worse, are circumvented or manipulated by those with more resources to do so. The result is a system that too often protects the big players and only affects the most vulnerable.
In this landscape, the greatest crime remains the lack of education and information that affects the most vulnerable, the impossibility of seeing an alternative, the difficulty of educating oneself to choose. This is what is truly unacceptable. "The rich have always won," we all know it, but we apply this vision only to the past and the future, forgetting that this vision can also be applied to the present: it is in the present that they win, because we lose every day. We lose without even playing.
This was just a defeatist preamble; the point of the article, however, is an attempt to deconstruct assumptions that we take for granted. That banks are safe, honest intermediaries and that we cannot do without them. That we all play by the same rules. That we all pay the same taxes and that, all in all, things are not so bad.
This is useful because we need an incentive; we need to rebalance our mental economy. Game theory clearly explains that without an incentive, the least costly alternative will prevail. This alternative is what big capital has plotted to make it seem easier for us not to worry about our savings, not to set fire to their villas, to accept continuous scandals and wars: it seems more tiring to make a revolution than to die in slavery. When they manage to make you believe this, then they win – without even playing.
In a previous article, we already talked about the solution to all these problems and how Bitcoin is the only one. Despite this, making a leap into the blockchain trying to land on your feet with Bitcoin might not be very simple. For this reason, today we are talking about an alternative, undoubtedly inferior, but which might convince you to enter the world of blockchain. We are not talking about cryptocurrencies with bizarre names, but about the digital transposition of the currencies we use every day: stablecoins.
Stablecoins are cryptocurrencies designed to maintain a stable value, pegged to a reference asset such as a "fiat" currency (traditional currencies, such as the US dollar) or a commodity (such as gold). This stability makes them ideal instruments for everyday transactions, savings, and international transfers, where the conversion from cryptocurrency to fiat currency is crucial, thus counteracting the typical price volatility of Bitcoin (characteristics entirely foreign to the technology, protocol, and daily operations within the network; and instead only dear to the world of big finance).
There are mainly three categories of stablecoins, each with distinct characteristics and mechanisms:
Fiat-backed stablecoins: These stablecoins are backed by reserves of traditional currencies, such as the dollar. For each unit issued, there is an equivalent amount of fiat currency held in reserve. Notable examples include Tether (USDT), whose founders are Italian, and USD Coin (USDC). These coins offer stability thanks to the traditional currency backing, but they are centralized, as they depend on entities that manage the reserves and the backing (we will see that we can accept this compromise).
Crypto-backed stablecoins: These stablecoins are backed by other cryptocurrencies, such as Ethereum, but to a greater extent than the value issued, to compensate for volatility. An example is DAI, issued by MakerDAO. Although decentralized, they can be vulnerable to value fluctuations of the underlying cryptocurrencies.
Algorithmic stablecoins: These are not backed by physical reserves but use algorithms and smart contracts to automatically regulate supply and maintain stable value. An example is TerraUSD (UST), which operated on the Ethereum blockchain. However, many of these stablecoins have shown vulnerabilities during periods of market stress.
Forget about the last two; they are mainly experiments for industry experts. In this article, we only talk about the first type.
Stablecoins operate on public blockchains, such as Ethereum. We have already discussed, in the previously mentioned article, that a public blockchain is a decentralized and accessible network for anyone, where every transaction is visible, traceable, and immutable. It is not controlled by a single entity (like a bank or a government) but is maintained by a network of computers spread around the world (P2P, peer-to-peer). Ethereum is one of the most well-known and used public blockchains, and it is also the one on which many of the stablecoins currently in circulation, such as USDC, DAI, and USDT (although the latter also exists on other blockchains like Tron or Solana), have been issued.
I imagine the question "but why aren't they issued on the Bitcoin blockchain?" spontaneously arises. Stablecoins are not natively issued on the Bitcoin blockchain for several reasons, mainly related to the intrinsic characteristics and limitations of the Bitcoin protocol:
Limited functionality for complex assets: The Bitcoin blockchain was originally designed for the management of a single digital asset, Bitcoin (BTC). Its programming script is intentionally limited for security and simplicity reasons.
Focus on decentralization and security of BTC: Bitcoin's philosophy strongly focuses on the decentralization, immutability, and security of its native cryptocurrency. Adding complex functionalities to support other assets could potentially compromise these fundamental principles.
More suitable alternative ecosystem: Other blockchains, such as Ethereum, were designed from the outset with greater flexibility and smart contract functionality. This has made it simpler and more natural to create and manage tokens, including stablecoins, through standards like ERC-20. Consequently, most existing stablecoins are issued on these more versatile platforms.
Saying that a stablecoin operates on Ethereum means that it does not exist in isolation or on a private server, but is "hosted" and managed within a public and decentralized network, which in our case is Ethereum. More precisely, it is represented by a token, that is, a digital asset created through computer code that leverages the rules of the underlying blockchain. Ethereum is not just a blockchain that records transactions (ledger), but it is also a smart contract platform: computer programs, immutable over time once published, that execute automatically according to pre-established rules. This makes it particularly suitable for hosting assets, such as stablecoins, and for making them interact programmatically with other decentralized applications. More precisely, a stablecoin is built according to the ERC-20 standard, that is, it follows a series of common rules, written in code, that define its behavior and interaction with the Ethereum ecosystem. The ERC-20 standard establishes, among other things: how tokens are sent from one user to another; how an application can "see" how many tokens a certain user owns; how to authorize another app or service to spend your tokens on your behalf.
This standardization is fundamental because it allows all wallets, exchanges, marketplaces, apps, and smart contracts on Ethereum to recognize, manage, and exchange those tokens interoperably. It doesn't matter if it's a stablecoin, a game token, or a financial asset: if it's an ERC-20, it can be treated in the same way. This means Stablecoins can be used for a variety of purposes:
Financial inclusion: the traditional banking system, with its network of current accounts, credit cards, and loans, is a consolidated reality in Western countries. However, this financial infrastructure is a privilege, not a universal right. In many regions of the world, access to banking services is limited or even non-existent (without a significant number of transactions, there is no profit). According to data from the Global Findex 2021, about 1.4 billion people worldwide do not have a bank account. Most of these people live in developing countries, where access to banking services is hindered by factors such as lack of infrastructure, poverty, gender inequality, and scarcity of official identity documents. For example, in Latin America and the Caribbean, about 27% of adults do not have access to a bank account, compared to only 3% in high-income countries. In many rural areas of Africa, access to banking services is even more limited. However, the introduction of technologies such as mobile money has begun to bridge this gap, allowing millions of people to access basic financial services through their mobile phones. Exclusion from banking services is not just a matter of access to financial instruments; it is also a significant barrier to economic and social development. Without a bank account, people cannot save safely, receive digital payments, access credit, or fully participate in the economy. This perpetuates the cycle of poverty and limits opportunities for economic growth. For example, in many regions of Africa, small businesses and farmers do not have access to formal financing, forcing them to resort to informal loans with high interest rates. This limits their ability to invest and grow, hindering local economic development.
Store of value: in unstable economic contexts, where inflation rapidly erodes the purchasing power of local currencies, stablecoins represent a real lifeline. In countries like Venezuela, Argentina, Zimbabwe, or Lebanon, many people try to protect their savings by quickly converting local currency into US dollars or stablecoins that replicate their value, such as USDT or USDC. These stablecoins thus become an accessible tool for storing value in digital form, without necessarily having to hold cash in foreign currency (which in some countries can be illegal or logistically difficult to obtain). In addition, those who hold stablecoins can also use them to access global financial services, such as payments, investments, or simply to maintain a safe form of liquidity.
International transfers: one of the most evident and advantageous uses of stablecoins is in cross-border money transfers. Traditionally, sending money from one country to another involves high costs, long delays, and a strong dependence on intermediaries such as banks or services like Western Union, MoneyGram, or SWIFT. These services can apply fixed fees plus a percentage of the amount sent, in addition to non-transparent margins on the exchange rate. The whole process can also take several days. With stablecoins, the transfer can take place in seconds or minutes, 24 hours a day, 7 days a week, at costs often less than a cent of a dollar, depending on the blockchain network used. For example, a person working in Germany can send USD-T to a family member in Nigeria, who will receive the amount almost instantly and can exchange it into local currency through an exchange or a P2P (peer-to-peer) platform. This system is not only faster and more transparent but also opens up possibilities for those who do not have access to bank accounts.
Digital payments: they can be used to purchase goods and services online, offering a stable alternative to volatile cryptocurrencies. Stablecoins can be used to make online purchases or even in physical stores that accept cryptocurrencies. Unlike Bitcoin, whose value can change drastically within a few hours (again... not that we care much about that), a stablecoin maintains its dollar counter-value constant, for example, 1 USDT = 1 USD (commonly referring to the dollar, but you can think of it in euros). This stability is fundamental when it comes to commercial transactions: neither the buyer nor the seller wants to be exposed to unpredictable price fluctuations (unless both decide to operate only in Bitcoin. At that point, 1 BTC = 1 BTC, regardless of its financial counter-value). Some e-commerce platforms, freelance marketplaces, or online services are beginning to accept stablecoins, offering their users a global and accessible payment method. In countries with high inflation or currency instability, paying in stablecoins can also be the only way to access certain goods or services, moving from financial inclusion to real inclusion.
Decentralized Finance (DeFi): Stablecoins are the backbone of decentralized finance. In DeFi, there are protocols that allow you to earn yields, request loans, exchange assets, or insure against risks, all without intermediaries. It is not a way for everyone, but it represents an alternative that can be chosen. In this context, the value stability of stablecoins makes them ideal for acting as collateral, a medium of exchange, and a unit of account. For example, a user can deposit 1,000 USDT in a protocol like Aave or Compound and receive passive interest (yield) in return, without having to sell their assets. Or, they can use stablecoins to borrow other cryptocurrencies, paying an interest rate regulated by supply and demand. Alternatively, they can trade on decentralized exchanges like Uniswap, maintaining a stable position against the market. The presence of stablecoins in these ecosystems allows many users to participate in digital finance safely, accessibly, and at the same time without being directly exposed to the volatility of cryptocurrencies.
Stablecoins therefore represent our first real opportunity to do for money what email did for communication: make it open, instant, and borderless.
Think about the evolution of messaging. Before WhatsApp, sending a text message across borders meant paying 30 cents per message, and you were lucky if it was actually delivered. Then came native internet messaging: instant, global, free. Payments today are where messaging was in 2008: fragmented by borders, burdened by intermediaries, hindered by closed systems.
Stablecoins offer an alternative from scratch. Instead of patching up cumbersome, expensive, and obsolete systems, stablecoins flow frictionlessly over global blockchains. These systems are programmable, composable, and designed to scale beyond borders. Already today, stablecoins are drastically reducing the cost of remittances: sending $200 from the United States to Colombia with traditional methods costs $12.13; with stablecoins, it can even cost $0.01 at certain times!
Just as WhatsApp revolutionized telecommunications, blockchain payments and stablecoins are transforming the way money moves globally.
There are mainly two disadvantages regarding stablecoin: technical risks and centralization. As we said, algorithmic and crypto-backed stablecoins can be vulnerable to technical problems or unforeseen market fluctuations. However, these risks are less pressing for fiat-backed ones. Fiat-backed stablecoins are issued and controlled by centralized entities, which can introduce management and regulatory risks. For many, this represents a significant red flag, but if we can hold our noses, they could represent an excellent starting point.
However, companies like Tether are fully aware of the limitations that this architecture entails and, precisely for this reason, have progressively introduced a series of operating practices, control tools, and transparency measures to address and reduce these risks. Let's see how.
Increasing transparency on reserves. For years, one of the most critical points raised against Tether was the lack of clarity on how reserves were held. Today, however, the situation has changed significantly: Tether publishes periodic attestation reports, prepared by independent auditing firms (such as BDO), which detail the composition of the reserves. These reports indicate not only that the reserves fully cover the USDT tokens in circulation but also in which financial instruments they are invested: for example, short-term US Treasuries, liquidity, and to a lesser extent other liquid assets. The company has progressively reduced its exposure to risky instruments, such as commercial paper (unsecured debt securities), instead increasing the component of safer and more liquid reserves. This level of detail offers users an increasing degree of confidence: even if USDT is centralized, it is no longer opaque.
Over-collateralized reserve and liquidity Tether does not limit itself to holding a quantity of reserves equal to the USDT in circulation. In many periods, it has shown a prudently over-collateralized approach, maintaining coverage above 100%. Furthermore: The composition of the reserves favors highly liquid and low-risk assets, so as to be able to quickly handle even very substantial redemption requests (as happened in episodes of market stress). This allows Tether to ensure 1:1 convertibility even in adverse conditions, maintaining user confidence and guaranteeing the stability of the peg (the anchoring to the dollar).
Collaboration with Authorities and Compliance Tether regularly collaborates with supervisory authorities and regulatory bodies. This is not only for legal reasons but also to strengthen its legitimacy and the security of the ecosystem. In particular: Tether has implemented rigorous KYC/AML (Know Your Customer / Anti-Money Laundering) procedures at fiat access points (i.e., in the conversion processes between dollars and USDT). It has also strengthened control measures against the illicit use of the stablecoin (e.g., money laundering, terrorist financing), collaborating with companies like Chainalysis to monitor blockchain activity. In some cases, it has been able to freeze funds associated with criminal activities or thefts, demonstrating its ability to act in a targeted manner to protect users. Although this type of intervention is only possible with centralization, it is a type of "responsible" centralization that aims to protect the integrity of the system.
Multi-Chain Presence and Interoperability Tether has made USDT available on more than 10 blockchains, including Ethereum, Tron, Avalanche, Solana, and Algorand. This allows users to: choose the most economical or fastest network based on their needs; reduce dependence on a single technical infrastructure, increasing the resilience of the system; and promote the integration of USDT with a variety of wallets, platforms, DeFi protocols, and applications.
Before concluding with some words from Tether's CEO, an Italian genius and visionary, let's finish with a focus on stability.
The main mechanism through which fiat-backed stablecoins maintain their price stability (the "peg") is fiat collateral, i.e., the reserve of traditional currency that supports them: for every stablecoin issued, the issuing entity (like Tether or Circle) holds an equivalent amount of fiat currency (usually US dollars or euros) in a bank account or in equivalent liquid assets (such as short-term government bonds). This reserve acts as a guarantee: in theory, every holder of a stablecoin should be able to redeem it from the issuer for the corresponding amount of fiat currency. Transparency regarding the composition and custody of these reserves is fundamental for user trust. Then there are arbitrage mechanisms. Even with adequate reserves, the price of a stablecoin on an exchange can slightly deviate from its peg (for example, falling to $0.99 USD or rising to $1.01 USD). In this scenario, arbitrage comes into play. Traders who notice this discrepancy have an incentive to buy the stablecoin at the lower price and sell it at the higher price (or vice versa), making a small profit. This buying and selling activity in the markets tends to bring the price of the stablecoin back towards its reference value (the peg); the more active the market, the more effective this action will be. If USDT falls below $1 USD, arbitrageurs buy it, increasing demand and pushing the price upwards. If it rises above $1 USD, they sell it, increasing supply and pushing the price downwards.
In the same way, direct intervention by the issuer can also occur. In some cases, the stablecoin issuer itself can directly intervene in the market to defend the peg. If the price falls significantly below the peg, the issuer can buy large quantities of its own stablecoin to reduce its supply and raise its price. Conversely, if the price rises too high, the issuer can issue new stablecoins and sell them to increase supply and lower the price.
We conclude with some summary words from Tether's CEO, Paolo Ardoino: "Beyond the role we play in financial inclusion, we are among the top holders of US Treasury bills, ranking nineteenth (more than many countries in the world), making a direct contribution to the liquidity and stability of US debt markets. Our investments follow a strategy that favors assets characterized by safety and high liquidity, ensuring that USDT maintains full coverage and the trust of users internationally, while contributing to the solidity of the global financial system. Tether's role has always been to provide seamless access to digital dollars and offer stability and financial inclusion within a rapidly evolving economic landscape. Although there is increasing discussion about Bitcoin as a reserve asset, it remains to be seen how its actual adoption by nation-states will develop, and what impact this will have on the global financial system. USDT continues to be the most used stablecoin in the world, bringing efficiency, access to liquidity, and the dollar, especially in areas where traditional banking services are lacking or do not welcome less profitable account holders."
All of this makes Tether USD-T the most effective financial asset on the planet: no bank would dream of such a level of collateral, spatial coverage, transparency, and efficiency.
Before concluding, let's talk about the very current topic of state digital currencies, the famous digital euro, about which we will know more at the end of 2025. I will write an article about it, and we will address this topic with particular attention when the situation is clear; I leave you with another reflection from Paolo on the matter: "Central Bank Digital Currencies (CBDCs) represent a very different vision of digital money compared to stablecoins like USDT. While CBDCs are often presented as an innovation, in reality, they introduce significant risks, particularly in terms of financial surveillance, programmability of conditions and limitations of use, and control over individuals' transactions. They further centralize power, allowing governments to dictate how, when, and where money can be used, potentially imposing expiration dates on funds or limiting access based on social or political criteria. Stablecoins, on the other hand, operate on open networks, providing users with financial autonomy, censorship resistance, and accessibility from anywhere in the world. This level of financial freedom is not what CBDCs are designed to provide. While some governments may try to force the adoption of CBDCs, it is unlikely that they will replace stablecoins. The demand for truly decentralized and permissionless financial instruments will grow as people become more aware of the potential risks of government-controlled digital currencies. The coexistence of CBDCs and stablecoins is possible, and ultimately, people will choose the financial instruments that offer them true autonomy and protection from centralized control."
We conclude with the usual practical note, the famous "so what?"... so:
Choose a Non-Custodial (self-custody) Wallet:
That is, a wallet where only you have control of the private keys. No third-party service can access your funds. This is fundamental for self-custody and decentralization. Practical options for beginners:
Mobile Wallet: Smartphone apps like MetaMask Mobile are generally easy to use and offer a good compromise between convenience and security.
Desktop Wallet: Open your trusted browser and install the MetaMask extension.
Important: During wallet setup, you will be provided with a recovery phrase (seed phrase). Write it down on paper and store it in a safe and offline place. This is the only way to recover your funds if you lose access to your device. Do not share it with anyone!
Buy USDT:
Peer-to-peer exchange: Meet someone physically or online to whom you send money to receive USDT in return on your wallet.
Decentralized Exchanges: If you already own cryptocurrencies, you can buy USDT on decentralized exchanges like Uniswap (on Ethereum).
Centralized Exchanges (CEX): Although less decentralized, centralized exchanges like Binance, Kraken, or Coinbase are often easier for beginners to use to buy USDT with fiat currency or other cryptocurrencies. They have an intuitive user interface and the ability to buy with traditional payment methods. The cons are significant: they require KYC, and you only have custody of your funds on the exchange (it's not self-custody). After purchasing, you should immediately move your USDT to your self-custody wallet.
Use USDT:
For us Bitcoin maximalists, this is just noise: the lack of absolute decentralization is enough to distance us from this type of solution, but it would be counterproductive not to recognize a certain usefulness and identify in this type of cryptocurrency a great potential gateway to the blockchain. I hope to hear you knock, I and others will be happy to open the door for you!