Stablecoins vs CBDCs: The Fight for the Future of Money

The future is weird. We know that. A lot of people are very much afraid that with all these new developments there will be even more control by either governments or large tech firms. Another very reasonable concern. As you know by now I also find it important to share the developments that are working on preventing those bad things from happening. Today, it’s time for another one of those technologies: stablecoins. For some this might be the most boring thing ever, for others its the foundation of a new economy. You guessed it, I am much more in the latter camp 😉.

The reason it’s interesting to talk about them now is the recent passing of “The Genius Act” in the United States. Before I will explain what this means, let’s start with the basic. What is a stablecoin, why is the current digital money on our bank account not enough and why do we NOT want a CBDC (central bank digital currency).

What is a stablecoin?

A stablecoin is a type of digital currency that lives on the blockchain but is tied to a “stable” value, usually 1:1 with the U.S. dollar or euro. Think of it as crypto’s answer to cash: fast, borderless, and programmable, but without the volatility of Bitcoin or Ethereum.

There are different flavors of stablecoins:
• Fiat-backed (like USDC or USDT): every token in circulation is matched by dollars or bonds (government debt that pays interest and is considered very safe) held in reserve.
• Crypto-collateralized (like DAI): backed by other crypto assets, but designed with smart contracts to keep its peg (a peg means its value is fixed to another currency, like always staying $1).

The key idea? You get digital money that combines the speed and openness of blockchain with the stability of traditional currency.

Why isn’t the money in our bank accounts enough?

But wait, the balance you see in your banking app might feel like digital money already. Hate to break it to you, but it’s not. That number isn’t “real” money. It’s a promise. 😅

What sits in your bank account is a liability of your commercial bank — basically an IOU (I Owe You: a written or digital promise to pay you back). If your bank fails, your deposits can disappear. Governments insure part of it (for example up to €100,000 in the EU or $250,000 in the U.S.), but beyond that you’re exposed. In other words: the safety of your money depends on the health of your bank and whether it stays solvent (meaning it has enough assets to meet its obligations).

And solvent is another way of saying you’re trusting the people running your bank to make the right decisions. I love people, I really do, but we all make mistakes and we all know that power corrupts..

We don’t need to look far for proof. In 2008, the global financial system nearly collapsed because banks took reckless risks with other people’s money. Mortgages were bundled into toxic products, regulators looked the other way, and when it all came crashing down, taxpayers were forced to bail out the very institutions that caused the mess. Millions lost their homes, savings, and jobs. The trust that “your money is safe in a bank” was shattered.

That’s very different from cash, which is a direct claim on the state. With bank deposits, you’re ultimately trusting a private company not to screw it up..

This is the fundamental reason that Bitcoin, and the blockchain technology that powers it, was created. Satoshi Nakamoto, the legendary (and still anonymous) inventor of Bitcoin, explained it in his Bitcoin whitepaper back in 2008. His motivation was simple: the financial crisis showed that we can’t trust banks. If banks can fail and governments can change the rules overnight, why not build a money system that doesn’t rely on either of them?

Bitcoin was Satoshi’s answer: peer-to-peer money that didn’t require trust in banks or governments. Instead, trust was shifted to open code, transparent rules, and a decentralized network of participants.

Enter the CBDC: Governments’ Digital Answer

Fast forward to today. Governments around the world are looking at that same question: how should money work in a digital-first economy? Their answer isn’t Bitcoin or stablecoins. It’s something very different: the Central Bank Digital Currency (CBDC).

On paper, CBDCs sound like progress. They promise:
• Faster and cheaper payments, both domestic and cross-border.
• A way to include people without bank accounts in the financial system.
• A more efficient economy where money can be “programmed” for specific uses (think stimulus payments that can only be spent on essentials).

China is already rolling out its digital yuan. The European Central Bank is running pilots for a digital euro. Over 130 countries are actively exploring CBDCs.

The problem is though.. CBDC is not the same as Bitcoin, or even a stablecoin. It’s the opposite. Instead of decentralizing money, it centralizes it even further. Every transaction could be visible to the central bank. Rules could be coded directly into the money. In the extreme scenario, your government could decide when, where, or even if you’re allowed to spend.

In short: CBDCs make the economy more tech-forward, yes.. but also more controllable.

Why we don’t want a CBDC

For people who have been following me for a while now, definitely know I am a big, big advocate for decentralization. Our internet has become a closed prison, as I discussed in my July 16 article titled: “We broke the internet. Can we fix it?”. This is the main reason I strongly believe in blockchain technology. Now let me explain why don’t want a CBDC in any shape or form. Below are three big risks that will become reality if CBDC’s become the norm:

1. Total surveillance

   Every transaction in a CBDC system can be tracked. That means no more financial privacy. Every coffee you buy, every charity you support, every side hustle you run could be visible to the central bank. In the wrong hands, money becomes the ultimate surveillance tool.

2. Programmable control
   CBDCs aren’t just money, they’re programmable money. On paper, this could sound useful: stimulus payments that can only be spent on essentials, or welfare benefits that can’t be wasted on gambling. But imagine the flip side: money that expires if you don’t spend it fast enough, donations blocked because the recipient isn’t “approved,” or funds frozen with a click of a button.

3. The kill switch
   With cash, once it’s in your wallet, it’s yours. With CBDCs, ownership is conditional. A government could freeze your account, delete your balance, or restrict access, whether for legal reasons, political disagreements, or simply “technical issues..” 😅 

Some data on how the adoption and government intrest is growing:

Christine Lagarde, the President of the European Central Bank (ECB), has been a prominent figure in discussions about digital currencies since taking office in 2019. Her views emphasize maintaining Europe's monetary sovereignty in a rapidly digitizing financial landscape. She

Interestingly enough, as of last week news was leaked that the European Central Bank was looking at public blockchains for their potential CBDC. Instead of a potential private ledger, which would bring all the risks as shared above.

Stablecoins on the Rise

While governments are busy designing CBDCs, stablecoins are quietly becoming the money of the internet. And their adoption is exploding.

According to the U.S. government’s 2025 Digital Assets Report, stablecoin usage has scaled at a pace that’s hard to ignore:

• In 2023 alone, stablecoins settled over $11 trillion in transactions on public blockchains—up from just $250 billion in 2019.

• Stablecoin transaction volumes now exceed what Visa and Mastercard process annually.

• The total stablecoin market capitalization has climbed above $160 billion, with dollar-backed tokens like USDT and USDC dominating.

• Beyond the U.S., adoption is global. In countries battling inflation such as Argentina, Turkey, and Nigeria, stablecoins are becoming a de facto dollar substitute, often easier to hold than opening a local bank account.

In other words, what started as a crypto side-experiment is now a systemic part of global finance.

This is why the recent passing of the GENIUS Act in the United States is so significant. For the first time, the U.S. has created a federal legal framework for payment stablecoins. In plain English: stablecoins aren’t just tolerated anymore but are recognized as part of the financial system.

The GENIUS Act requires that:

• Stablecoins are backed 1:1 with safe assets like dollars or U.S. Treasuries.

• Issuers must be licensed and transparent about their reserves.

• Customer funds are protected, even if the issuer goes bankrupt.

• Anti-money laundering and security standards apply.

The message is clear: stablecoins are not going away. In fact, they now have a runway to grow under clearer rules.

It’s interesting to see that the U.S. chose to lean into stablecoins, even though they could have gone the more centralizing and controlling CBDC route. Don’t think this is just because the current administration loves to “fight for freedom.” 😉 There’s a clear strategic advantage:

• If the world uses dollar-backed stablecoins, the U.S. dollar stays dominant as the global reserve currency.
• And because these stablecoins are backed by U.S. Treasuries, it creates consistent demand for government debt.

It’s a smart move, one that aligns geopolitical power with financial innovation.

Closing Thoughts

Money is power. Who issues it, who controls it, and who decides how it can be used shapes the freedoms we have in our daily lives. CBDCs may look shiny and modern, but they tilt power even further toward central authorities. Stablecoins, while not perfect, tilt it the other way toward openness, resilience, and choice.

I’m convinced that decentralization isn’t just a technical design; it’s a safeguard for freedom. The more we embed power into code and distributed systems, the less we have to trust fallible people and institutions. History has shown us what happens when too much control concentrates in too few hands.

That’s why the rise of stablecoins matters. Not just because they’re efficient or programmable, but because they offer a path toward a financial system that is less fragile, less censorable, and more aligned with the principles of a free and open society.

The future of money is being written right now. And if we care about freedom, we can’t afford to leave that pen in the hands of central banks alone.

Freedom first, always.

Thank you for reading once again and much love.

Funs ❤️ 

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