EconoFact Chats Understanding the Rise and Risks of Stablecoins
Jul 13, 2025
Udaibir Das, a Distinguished Fellow at the Observer Research Foundation with a rich background at the IMF and the Reserve Bank of India, unpacks the dynamic world of stablecoins. He explains how these crypto-tokens, pegged to fiat currencies, aim to offer stability amidst volatility. Discussions touch on their dual nature in facilitating transactions and their risks in illicit activities. Das also addresses the recent regulatory landscape and the balance governments must strike between fostering innovation and ensuring financial safety, drawing lessons from FTX's collapse.
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Bitcoin's Origin Story
- Bitcoin was created as internet money to send value directly without banks or intermediaries.
- It replaces institutional trust with mathematical consensus, pioneered by Satoshi Nakamoto in 2008.
Bitcoin's Evolution Phases
- Bitcoin evolved through four phases: experimentation, crashes, maturing as digital gold, and institutional adoption.
- It failed as a medium of exchange and mostly acts now as a store of value or speculative asset.
Stablecoins Defined and Critiqued
- Stablecoins are crypto tokens pegged to fiat currencies, aiming to offer price stability.
- They serve as digital cash for transactions, unlike volatile Bitcoin, but face criticism from Bitcoin purists.