The Millennial Leap of Currency Forms: From Shell Money to Stablecoins

The history of currency is humanity's eternal quest for "efficiency" and "trust." From the shell money of the Neolithic era to the bronze coins of the Shang and Zhou dynasties, and then to the half-ting coins of the Qin and Han dynasties, each transformation embodies technological breakthroughs and institutional innovations.

The Northern Song Dynasty's jiaozi replaced metal currency with paper money, pioneering the concept 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 relying on US Treasury bonds and military strength.

The emergence of Bitcoin marks a paradigm revolution in trust mechanisms. The rise of stablecoins further compresses trust into mathematical certainty. This new form of "code is credit" is reshaping the distribution logic of monetary power, shifting from the state's seigniorage privileges to the consensus monopoly of algorithm developers.

Each transformation of currency forms reconstructs the power structure: from the barter system of the shell money era, to the centralization of metal currency, to the state credit of paper money, and finally to the distributed consensus of the digital currency era. When the SWIFT system has become a tool for financial sanctions, stablecoins have transcended the "payment tool" category, marking the beginning of the shift of monetary power from sovereign states to algorithms and consensus.

In this era of fragile trust, code is becoming a more solid anchor of credit than gold with mathematical certainty. Stablecoins are pushing the millennium-old monetary game into a new phase: when code begins to write the currency constitution, trust is no longer a scarce resource, but a programmable, divisible, and playable digital power.

The "Dollar Substitute" of the Crypto World

In 2008, Satoshi Nakamoto published the "Bitcoin White Paper," proposing the concept of decentralized digital currency. Bitcoin was officially born in 2009, and early transactions relied entirely on a peer-to-peer network, lacking standardized pricing and liquidity.

The first Bitcoin exchange Mt.Gox was established in 2010, but the trading efficiency was extremely low. Bank transfers took a long time, the fees were high, and there were losses due to exchange rates. This inefficient payment system severely restricted the circulation of Bitcoin.

In 2014, Tether launched USDT, promising a 1:1 peg to the US dollar. It broke the barrier between fiat currency and cryptocurrency, becoming the first "fiat currency substitute" in the crypto world. USDT quickly dominated major trading pairs on exchanges, sparking a frenzy of cross-platform arbitrage and becoming a liquidity bridge. In some countries with severe inflation, USDT is even seen as a "last line of defense" against the depreciation of local currency.

However, the "1:1 peg" of USDT has always been questioned. The opacity of its reserve asset composition has raised market concerns. Its anonymity makes it a tool for illegal transactions. This trust crisis stems from the contradiction between "efficiency first" and "trust rigidity": the coded "1:1 commitment" attempts to replace sovereign credit with mathematical certainty but has fallen into the "trust paradox" due to centralized operations.

USDC was launched by Circle and Coinbase in 2018, aiming to provide a transparent and compliant dollar stablecoin. Its reserve assets have fully shifted to cash and short-term U.S. Treasury bonds, enhancing the credibility of the "full fiat currency reserves". USDC has gradually expanded to a multi-chain ecosystem and has become a representative institutional-level stablecoin through close collaboration with regulatory agencies.

The development of stablecoins signifies that in the future, one must seek a balance between decentralized ideals and real financial regulations. How to construct a new trust mechanism will be the core challenge faced in this field.

Barbaric Growth and Trust Crisis

The anonymity and cross-border liquidity of early cryptocurrencies were originally experiments against financial censorship, but gradually evolved into a refuge for criminals. Dark web markets were the first to use Bitcoin to trade illegal goods, and Monero became the preferred payment tool for ransomware due to its complete anonymity. By 2018, cryptocurrency crime had formed a complete industrial chain.

Stablecoins have become a vehicle for "dark finance." In 2019, a hacker organization laundered over $100 million through USDT. In 2020, Europol uncovered a case involving a terrorist organization raising funds using stablecoins. These incidents prompted the FATF to issue regulatory guidelines for virtual assets, but the lag in regulation has instead led to the emergence of more complex evasion tactics.

The rise and fall of algorithmic stablecoins has heightened the trust crisis. In May 2022, the collapse of Terra's UST resulted in a market cap of approximately $18.7 billion going to zero, leading to the downfall of multiple institutions. This disaster exposed the fatal flaw of algorithmic stablecoins: their value stability relies entirely on a fragile balance between market confidence and code logic.

The trust crisis of centralized stablecoins stems from the "black box operations" of financial infrastructure. The controversy over Tether's reserve assets and the de-pegging event of USDC triggered by bank failures reveal the risks of the deep ties between traditional finance 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 revolution in transparency. DAI builds a multi-asset collateral system, while USDC implements a "glass box" strategy. This self-rescue movement is essentially a transition of cryptocurrency from the utopia of "code is credit" to a compromise within the traditional financial regulatory framework.

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

Regulatory Integration and Sovereign Competition

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 enacted the "Stablecoin Regulation," becoming the world's first region to implement full-chain regulation of fiat stablecoins. This competition is essentially about sovereign nations vying for currency pricing power and control over 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 matched 1:1 by US dollar cash or short-term US Treasury bonds. The Act clarifies that stablecoins are not considered securities or commodities, exempting them from traditional financial regulation while strengthening requirements for anti-money laundering and consumer protection. Its core significance lies in consolidating the digital dominance of the US dollar and attracting global stablecoin resources into the US market.

The EU MiCA regulation will come into effect in 2024, covering EU and European Economic Area countries. The regulation requires stablecoin issuers to hold sufficient reserves through a classified regulatory model and prohibits high-risk investments. The aim of the regulation is to promote compliance in the EU crypto market and enhance financial stability.

The Hong Kong "Stablecoin Regulation" requires issuers to apply for a license and meet requirements for reserve assets, isolated management, and other criteria. The regulation covers both onshore and offshore HKD-pegged stablecoins and prohibits unlicensed sales to retail investors. Its core significance lies in establishing Hong Kong as the world's first jurisdiction to systematically regulate stablecoins, exploring the development path of the RMB stablecoin.

Regulation of stablecoins in other regions around the world shows a differentiated path. Countries like Singapore and Japan regulate the issuance of stablecoins through legislation; China has completely banned virtual currency trading, but Hong Kong is promoting compliant pilot projects; Russia allows USDT for cross-border trade; some countries in Africa and Latin America encourage the use of stablecoins due to a shortage of US dollars.

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

Now and Future: Deconstruction, Reconstruction and Redefinition

The ten-year journey of stablecoins is an epic of technological breakthroughs, trust games, and power restructuring. From a "technical patch" that addresses the liquidity dilemma in the crypto market to a "global financial order disruptor" that undermines the status of sovereign currencies, it continuously evolves between efficiency and trust, regulation and innovation.

The rise of stablecoins is essentially a re-examination of the "nature of money." Humanity's definition of value carriers is shifting from "reliable physical objects" to "verifiable rules." Each crisis and self-rescue of stablecoins reshapes these rules: from centralized custody to over-collateralization transparency, from anonymity to regulatory adaptation, from algorithmic balancing to multi-asset collateral resilience building.

Its controversy reflects the deep contradictions of the digital age: the game between efficiency and security, the struggle between innovation and regulation, and the conflict between globalization ideals and sovereign realities. Stablecoin has become a mirror reflecting the possibilities of digital finance and humanity's yearning for a trustworthy order.

Looking to the future, stablecoins may continue to evolve in the interplay between regulation and innovation, potentially becoming the cornerstone of the "new monetary system" in the digital economy era, or they may face another reconstruction. However, they have 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 starting point for humanity's exploration of a more efficient, fairer, and more inclusive monetary order.