The Millennium Leap of Currency Forms: The Rise and Transformation of Stablecoins

The history of currency is an eternal quest and game of "efficiency" and "trust" for humanity. From the natural scarcity of cowrie shells to the authoritative imprint of bronze coins, from the unified system of half-tael coins in the Qin and Han dynasties to the embryonic credit of the Tang and Song dynasty's Jiaozi, each transition in form is a resonance of technology and system.

The Northern Song Dynasty's jiaozi replaced iron coins with paper made from mulberry bark, breaking the circulation dilemma. The monetization of silver in the Ming and Qing dynasties shifted trust towards precious metals. After the collapse of the Bretton Woods system in the 20th century, the US dollar reestablished global hegemony based purely on credit. The emergence of Bitcoin has torn apart the traditional financial system, while the rise of stablecoins marks a paradigm revolution in trust mechanisms.

The transformation of currency forms continuously reshapes the power structure: from the barter system of the shell currency era, to the centralization of metal currencies, then to the national credit of the paper currency era, and finally to the distributed consensus of digital currencies. When USDT is questioned due to reserve controversies and when SWIFT becomes a tool for sanctions, stablecoins have transcended the category of "payment tools", opening the curtain on the transfer of monetary power.

In this digitally fragile age of trust, code is becoming a more solid anchor of credit than gold, with the certainty of mathematics. Stablecoins push this millennial game towards its conclusion: when code writes the constitution of currency, trust is no longer a scarce resource, but a programmable, divisible, and gamified digital power.

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

After the birth of Bitcoin in 2009, early transactions relied entirely on peer-to-peer networks, lacking standardized pricing and liquidity. The first exchange, Mt. Gox, was established in 2010, but the inefficiency of bank transfers severely restricted the circulation of Bitcoin.

In 2014, Tether launched USDT, breaking the barrier between fiat and cryptocurrency with the promise of "1:1 pegged to the US dollar," becoming the first "fiat substitute" in the crypto world. USDC was jointly launched by Circle and Coinbase in 2018, aiming to provide a transparent and compliant fiat-pegged tool.

By 2017, USDT quickly captured 90% of trading pairs on exchanges, with its market value skyrocketing to $2 billion. It sparked a frenzy of cross-platform arbitrage, built liquidity bridges, and even became the "digital gold" for countries with hyperinflation.

However, the "1:1 peg" of USDT has always been shrouded in black box suspicion. Issues such as the controversy over reserve assets and money laundering risks due to anonymity highlight the deep contradictions between "efficiency first" and "trust rigidity." This suggests that stablecoins must seek a balance between decentralized ideals and real financial rules in the future.

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

The anonymity of cryptocurrencies and their cross-border liquidity have gradually become a "digital Swiss bank" for criminals. After 2018, stablecoins became the "golden channel" for criminal activities, involving money laundering, terrorist financing, and more. The lag in regulation has given rise to more complex evasion tactics.

The rise and fall of algorithmic stablecoins has pushed the trust crisis to a climax. In May 2022, the collapse of Terra's UST exposed the fatal flaws of algorithmic stablecoins. The trust crisis of centralized stablecoins stems from the "black-box operations" of financial infrastructure, such as the controversies surrounding USDT reserves and the de-pegging event of USDC triggered by bank failures.

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. This self-rescue movement is essentially a compromise for cryptocurrencies from the utopia of "code is credit" to the traditional financial regulatory framework.

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

In 2025, the United States passed the GENIUS Act, and Hong Kong enacted the Stablecoin Ordinance, marking the ultimate contest between sovereign nations for control over currency pricing power and payment infrastructure in the digital finance era.

The US GENIUS Act requires stablecoins to be pegged to US dollar assets and included in a regulatory framework. The EU MiCA Act adopts a categorized regulatory model covering 27 EU countries. Hong Kong's "Stablecoin Ordinance" has become the world's first systematic regulatory framework for fiat stablecoins.

Regulatory approaches to stablecoins vary across the globe: Singapore, Japan, and South Korea have established specific regulations; China prohibits virtual currency trading, but Hong Kong promotes compliant pilot programs; Russia allows their use for cross-border trade; some countries in Africa and Latin America adopt a lenient attitude due to a shortage of US dollars.

The deepening of global stablecoin regulation is reshaping the financial system landscape, affecting aspects such as the reconstruction of financial infrastructure, currency sovereignty competition, and the transmission of financial system risks. In the future, stablecoins may become an alternative infrastructure to CBDCs, but their long-term impact still needs to be observed.

Now and Future: Deconstruct, Reconstruct, and Redefine

Looking back from 2025, the decade-long journey of stablecoins is an epic of technological breakthroughs, trust games, and power restructuring. It has evolved from a "technical patch" to solve the liquidity dilemma in the crypto market to a "financial order disruptor" that shakes the status of sovereign currencies.

The rise of stablecoins has essentially redefined currency, evolving from physical credit to code credit. Its controversies reflect the deep contradictions of the digital age: the game between efficiency and security, the struggle between innovation and regulation, and the conflict between the ideals of globalization and the realities of sovereignty.

Looking to the future, stablecoins may continue to evolve amid the interplay of regulation and innovation, becoming the cornerstone of the "new monetary system" in the digital economy era, or they may undergo another reconstruction. In any case, it has profoundly rewritten the logic of monetary history: currency is no longer just a symbol of national credit, but rather a symbiotic entity of technology, consensus, and power.

Stablecoins will ultimately become an important starting point for humanity to explore a more efficient, fairer, and more inclusive monetary order. In this monetary revolution, we are both witnesses and participants.