In July 1944, as World War II drew to a close, representatives from more than 40 countries gathered in a small New Hampshire town to try to answer a seemingly simple question: What is currency, and who controls it? The Bretton Woods Conference was not the first time world leaders had addressed this question, and it would not be the last. Debates over gold, the dollar, and exchange rates shaped the architecture of the modern global financial system. For millennia, every major monetary revolution has revolved around a core question: Where does money derive its value? Debates over its value often revolve around its sovereignty and scarcity. Every monetary revolution has been less about the physical form of money than about trust, power, and the rules of the game. Stablecoins are the latest manifestation of this revolution, seemingly decentralizing trust and power. We believe stablecoins are the most influential form of money. The Commodity Money Era The earliest known forms of money were commodities, such as gold, silver, cowrie shells, and salt. These items were used for their intrinsic or widely recognized value, derived from their physical scarcity. For example, gold has a limited supply and needs to be mined, a difficult and expensive process. Scarcity creates credibility. If you hold a gold coin, you can trust it to be a good "store of value" because no government or unscrupulous banker can create more gold out of thin air. On the Micronesian island of Yap, currency takes the form of massive limestone disks, some weighing several tons. Mined in Palau, their value depends on size, ease of transportation, and provenance. Because ownership is tracked through community consensus rather than physical movement, these stones demonstrate that currency's power comes from shared belief rather than intrinsic value. But this form of currency also carries limitations. Commodity currencies are heavy, difficult to transport, and inefficient in a rapidly growing global economy. These physical limitations hinder payment throughput and stifle economic growth. Long-distance trade requires a system that transcends the limitations of metal weight and capital. The Transition to Fiat Currency Eventually, the combination of globalization and industrialization pushed commodity currencies to their limits. Governments stepped in to introduce fiat currencies. Initially, paper money redeemable for gold or silver gradually became widely accepted as money itself. The Bretton Woods system established this ecosystem by pegging the dollar to gold and pegging other world currencies to the dollar. This arrangement lasted for approximately 25 years. However, by the late 1960s, U.S. gold reserves could no longer support the dollar's global dominance. In 1971, President Nixon suspended the convertibility of the dollar into gold, ushering in the era of pure fiat (unbacked by physical currency). In the next phase of money, value derives from sovereign credibility, not physical scarcity. The dollar has value because the U.S. government claims it does, and markets, households, and foreign governments trust it. Trust has shifted from a physical foundation to a political and policy one. This profound shift has given states a powerful toolkit. Monetary policy has become a core lever for economic management and geopolitical strategy. But fiat currencies also create vulnerabilities to inflation, currency wars, and capital controls. At some levels, flexibility and stability are in opposition. Today, the core question surrounding modern monetary structures is not who can create money, but whether those in power can be trusted to maintain its value and utility over the long term. The rise of computers and the consumer internet raised an important question at the intersection of electrical engineering and finance: Can money be represented as bits in the digital world? In the 1990s and early 2000s, projects such as Mondex, Digicash, and eGold attempted to answer this question, promising new ways to pay electronically and store value. Ultimately, they failed due to regulatory pressure, technological flaws, and a lack of trust and market adaptability. At the same time, electronic banking, credit cards, payment networks, and settlement systems became commonplace. Importantly, these are not new assets, but rather new forms of fiat money, forms that are more scalable and fit for the modern world. But they remain subject to the same institutional trust and policy frameworks and, crucially, rely on closed technological systems and operational networks run by rent-seeking intermediaries. Stablecoins capitalize on this dynamic but take power away from corporations by using open, permissionless infrastructure. Fiat-backed stablecoins are inherently hybrid. They inherit the trust and efficiency attributes of fiat currencies while leveraging programmability and global accessibility. Pegging stablecoins to reserves redeemable at par makes their value predictable by leveraging the credibility of sovereign nations like the United States. Issuing them on public blockchains enables them to settle instantly, operate 24/7, and move frictionlessly across international borders. We believe that emerging regulatory frameworks for stablecoins (an intrinsic part of their “moneyness”) should align with our core principles on how stablecoins should serve their users.
No Permission Required:
Individuals should have control over their money, without onerous restrictions arbitrarily imposed on their accounts by middlemen. No Borders:
Geographic location should not determine whether someone can send or receive money, or how long a payment takes to be sent or received.
Privacy:
Consumers should be able to freely engage in commerce without fear of unreasonable surveillance by government, the private sector, or other consumers.
Trustworthy Neutrality:
Conclusion
Stablecoins are the next step in the evolution of money. They rely on sovereign trust like traditional fiat currencies, but unlike previous forms of electronic fiat (and the payment systems they transmit), they separate trust in sovereigns from trust in corporate power. Best-in-class monetary assets, based on best-in-class monetary technology and networks.
Miyuki
Weiliang
Alex
Brian