Dr. Eswar Prasad

But at least, you know, gold has some industrial uses.

It has value in jewelry, maybe in tooth fillings.

Bitcoin has not served well in terms of its basic function, which is as a payment mechanism.

So it has no intrinsic value.

So it's essentially a speculative financial asset.

The underlying logic of Bitcoin was that all elements were going to be decentralized, which means that there is no organization that issues the cryptocurrency.

The validation of transactions is just done through a computer algorithm.

And the supply is not controlled by any institution.

All of this has led to Bitcoin, as we were just discussing, not working very well as a medium of exchange.

And as you pointed out, Dan, the fact that it has very volatile value certainly makes it an unviable medium of exchange.

But there was still this desire to have a payment mechanism that would work well, and that gave rise to stablecoins.

Now, stablecoins are a curious creature.

They do use the blockchain technology of Bitcoin, but they are centralized in every other way.

There is an institution that issues them, that validates the transaction, and most importantly, that ensures their stable value.

by making sure that every unit of a stable coin that is issued is backed up by something that is considered safe and secure, something like a US government bonds or cash.

So at one level, stable coins are doing what

Bitcoin was supposed to do, but which Bitcoin is not doing very well, which is serve as a medium of exchange.

But at the same time, stable coins are hugely ironic because the whole point of Bitcoin was to get away from central bank money.

And instead we have a cryptocurrency that is serving as a payment mechanism, but that is backed up by central bank money.

But stable coins in a sense are working quite well because they have shown