The Different Types of Stablecoins
NOT Centralized IOU Issuance/On-Chain Collateralized/Seignorage Share
The Different Types are 3P Stablecoins, 2P Stablecoins, and 1P Stablecoins.
3rd-Party Stablecoin = 3P Stablecoin = “Stablecoin”
A Stablecoin from an independent Stablecoin Startup (Carbon, Stably, Tether, Reserve, TrueUSD, etc.)
In circulation now.
2nd-Party Stablecoin = 2P Stablecoin = “Digital Fiat”
A Stablecoin created by a major bank upon receipt of Physical Fiat from a consumer (ChaseCoin, WellsFargoCoin) and credited to the consumer’s Digital eWallet on their phone. Consumers can always walk into a 2P Stablecoin’s respective Bank Branch and redeem a 2P Stablecoin for $1 in Physical Fiat.
AKA ‘ChaseCoin/WellsFargoCoin/BOAcoin’.
In circulation starting 2025.
1st-Party Stablecoin = 1P Stablecoin = “Digital USD”
A Stablecoin created by the Federal Reserve upon receipt of a USD Bank Transfer by a bank. Those 1P Stablecoins are then held by the bank until consumers come in to deposit fiat in return for the 1P Stablecoin being credited to their Digital eWallet on their phone. 1P Stablecoins can be credited to consumers by both large banks and small banks alike. 1P Stablecoins will be used most by small banks who have no need for their own ‘branded stablecoin’. 1P Stablecoins can be redeemed for $1 in Physical Fiat at any bank in the USA.
AKA ‘FedCoin’.
In circulation starting 2040.
Centralized IOU Issuance, On-Chain Collateralized, and Seignorage Share Stablecoins are all underneath the ‘3P Stablecoin’ label.
1P and 2P Stablecoins are the most trusted extensions of the USD that can be created (because they are redeemable for $1 in Physical Fiat at a bank), and their Stability will also be secured by the underlying strength of all countries being required to buy USD in order to buy oil from OPEC Members to power their country.
I am extremely bullish on 1P and 2P Stablecoins (aka ‘Digital USD’ and ‘Digital Fiat’) because I’ve seen how amazing Digital Fiat is in China with their Alipay and WeChat Pay systems.
I am infinitely bearish on 3P Stablecoins because the teams have no plans to get Saudi Arabia to require payment for their oil in their 3P Stablecoin before USA consumers start using 2P Stablecoins from Chase Bank and Wells Fargo. This means the ‘reserve’ (real, implied, or perceived) to back up the 3P Stablecoins will quickly dry up as market participants flock to the more-trusted 2P Stablecoins. This will lead to the pegs permanently breaking as there is nobody left to ‘buy the dip’ and keep the 3P Stablecoin at its peg.
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