We are seeing a lot of attention being paid to stablecoins and rightly so.  This is an area of [cryptocurrency](https://leofinance.io/@leoglossary/cryptocurrency) that is going to radically alter the financial landscape.  While other aspects are trying to find their way, [stablecoins](https://leofinance.io/@leoglossary/leoglossary-stablecoin) have a clear purpose and are expanding.

All of this presents a major threat to the established system.  Anything that has to do with payments is suddenly under attack.  When [transactions](https://leofinance.io/@leoglossary/leoglossary-transaction) take place utilizing stablecoins, that is another nail in the coffin of the existing system.  By removing that transaction, the [revenue](https://leofinance.io/@leoglossary/leoglossary-revenue) tied to it also disappears.  This is a highly profitable business for [banks](https://leofinance.io/@leoglossary/leoglossary-bank).  The revenue generated by moving money around the world is enormous

Cryptocurrency entered with the promise of changing all of this.  [Bitcoin](https://leofinance.io/@leoglossary/leoglossary-bitcoin) was first promoted as an alternative to the existing financial structure.  It would allow average people to operate outside the banking system.  Here was a [currency](https://leofinance.io/@leoglossary/leoglossary-currency) that, when tied to a [digital](https://leofinance.io/@leoglossary/leoglossary-digital) [wallet](https://leofinance.io/@leoglossary/leoglossary-wallet), could provide money transfer services at a fraction of the [cost](https://leofinance.io/@leoglossary/leoglossary-cost).

Unfortunately, for Bitcoin, it did not evolve that way, at least so far.  The speed of the [network](https://leofinance.io/@leoglossary/leoglossary-network) along with [transaction fees](https://leofinance.io/@leoglossary/leoglossary-transaction-fee) hindered the progress.

This is not the case for stablecoins.  They were able to step in and fill this role admirably.

It now has gotten the attention of some very powerful people.  The question they are confronted with is whether they can do anything about it or not.

![image.png](https://images.hive.blog/DQmYXr66YfhsZWeAR6kYqKFezKLgVZithMiRQoHmzMGK2KL/image.png)
<center>[Source](https://www.moneyshop.co.za/money/banking/how-banking-has-changed/)</center>


### Jamie Dimon Is Worried

Jamie Dimon is probably the world's best known banker at this point.  As the long time CEO f [JP Morgan](https://leofinance.io/@leoglossary/leoglossary-jp-morgan-financials), Dimon is continually at the center of any discussions regarding the world of finance, money, and banking.  He appears on television all the time with his words carrying a lot of weight.

Over the years, we was the leader in the "we love [blockchain](https://leofinance.io/@leoglossary/blockchain), hate Bitcoin" rhetoric.  Now, at least according to Jeremy Allaire, we see why.

The [Circle](https://leofinance.io/@leoglossary/leoglossary-circle) CEO has come out and accused Dimon of being scared.  This makes sense if we think about the threat that stablecoins pose to his business.  He stated that the traditional banking system is now under attack and the bankers know it.

>Allaire says banks like JPMorgan or other big institutions are likely threatened by stablecoins, which he says could explain why they’re hesitant to publicly embrace them. 

>“A payment stablecoin, that is essentially like a token representation of cash, that is essentially a mixture of cash at the fed and short-term US government treasury bonds.

>That is in some ways would be the safest digital dollar in the world whereas a deposit at a  commercial bank, whether it’s JPMorgan or any other, is that’s a loan to the bank and the bank is then lending the money and you got a claim on it, but it’s different.

<center>[Source](https://dailyhodl.com/2022/10/10/circle-ceo-jeremy-allaire-says-jpmorgan-and-traditional-finance-threatened-by-idea-of-full-reserve-banking/)</center>

While there is a lot to be weary of with Allaire and Circle, he is not wrong on this point.  What is being presented is a massive shift in [counterparty](https://leofinance.io/@leoglossary/leoglossary-counterparty) [risk](https://leofinance.io/@leoglossary/leoglossary-risk).  Here we can see the prospects of forming a completely new system of [finance](https://leofinance.io/@leoglossary/leoglossary-finance), something that traditional banks are not excited about.

Of course, if this takes off, it is a problem that could be solved by the banks simply starting their own stablecoin.  Also, it is a safe bet that, at some point, if Circle is a major player, some [Wall Street](https://leofinance.io/@leoglossary/leoglossary-wall-street) firm seeks to buy them out.  We cannot expect the financial industry to sit by while their house of cards is dismantled.

Stablecoin adoption should be a concern to these people.  When it comes to [payments](https://leofinance.io/@leoglossary/leoglossary-payment), it far exceeds anything we presently have.  A blockchain is able to handle transactions anywhere in the world, for a fraction of the [cost](https://leofinance.io/@leoglossary/leoglossary-cost) of what the banks charge.  There is also enhanced security and safety since a decentralized blockchain is not subject to the corruption of the banking and [government](https://leofinance.io/@leoglossary/leoglossary-government) systems.

### Stablecoins Will Win

We have another assertion that shows the thinking regarding stablecoins.  This one comes from the founder of Compound.

Robert Leshner believes in the potential of stablecoins even after the collapse of UST.

>“Whether you're a retail user, a hedge fund, an exchange, a business that wants to do payments, stablecoins have crazy traction everywhere,” Compound founder Robert Leshner told Decrypt at Chainlink SmartCon in New York. “In some ways, what everyone expected Bitcoin to do… stablecoins have done.”

This makes a lot of sense.  While still relatively small, with a [market capitalization](https://leofinance.io/@leoglossary/leoglossary-market-capitalization) of around $150 billion, the potential is already evident.  Stablecoins are an enormous threat to the system.

He goes on to say:

>Stablecoins, he said, are “fundamentally better than the old payment rails of wiring money, or ACH money, or writing a paper [check](https://leofinance.io/@leoglossary/leoglossary-check-cheque), or using a credit card,” he said. “Stablecoins are superior. They're faster, they're cheaper, they're better, and left to their own devices, they will win and conquer everything.”

<center>[Source](https://decrypt.co/111782/regulators-are-targeting-stablecoins-due-to-crazy-product-market-fit-compounds-robert-leshner)</center>

It is hard to argue with this logic.  Simply considering the steps when using a stablecoin and blockchain reveal how they operate in a more advanced fashion.

Basically, geographic location means nothing.  With a stablecoin, value can be transferred to someone in the same town or around the world.  Since the [money](https://leofinance.io/@leoglossary/leoglossary-money) isn't technically "moved" in a geographic sense, the fees are the same.  This is not the case with the banking system.  Hence, the only contingency is if one can access the [Internet](https://leofinance.io/@leoglossary/leoglossary-internet).  As long as the private keys are there, the person can receive the money.

### HBD Is Going To Make A Statement

This is actually the first in a series of articles pertaining to stablecoins and, in particular, [HBD](https://leofinance.io/@leoglossary/leoglossary-hive-backed-dollar-hbd).  Here we have a primer, if you will, for what is to come.

We need to truly understand the power of stablecoins as a [medium of exchange](https://leofinance.io/@leoglossary/leoglossary-medium-of-exchange).  This is where projects teams need to focus.  Stablecoins have the use case.  The other [tokens](https://leofinance.io/@leoglossary/leoglossary-token) and [coins](https://leofinance.io/@leoglossary/leoglossary-coins) need to represent the value created by the ecosystem or project.  This is how the mindset is shifting.

Hive has a [base layer](https://leofinance.io/@leoglossary/leoglossary-base-layer-blockchain) stablecoin traded on an [internal exchange](https://leofinance.io/@leoglossary/leoglossary-internal-exchange-hive) with the [HBD Stabilizer](https://leofinance.io/@leoglossary/leoglossary-hbd-stabilizer) providing [liquidity](https://leofinance.io/@leoglossary/leoglossary-liquidity).  Here we see the vehicle to aid in both financial and commerce transactions.

Once this is understood by the project teams, we could see massive expansion in this area.  Either way, the [algorithmic](https://leofinance.io/@leoglossary/leoglossary-algorithm) stablecoin is vital to the future.  As stated, there is a lot we can be critical of when it comes to Circle.  This is not something we should blindly accept as a benefit to the industry.  Essentially, we are looking at a wolf in sheep's clothing.

For that reason, HBD serves as an important counterbalance.  There will be no filing to be a bank.  The coin is not controlled by some entity that seeks to be a part of the system.  Nor is there huge [wealth](https://leofinance.io/@leoglossary/leoglossary-wealth) being generated off the holdings that is going to shareholders.

In short, HBD does not feed the same beast sitting at a different table.  This is what Circle is looking to do.

We are now gaining a bit of [data](https://leofinance.io/@leoglossary/leoglossary-data) regarding HBD.  Thus, we are able to draw some conclusion about how the community reacts to the system we are construction.  In upcoming articles we will discuss where things stand and what other steps can be taken.

For the moment, we can relish in the fact that stablecoins are the first major threat to banking.  This will, hopefully, be followed up by massive development to build on top of it.  Once this happens, it is game over for many aspects of the financial system.

___
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