Hello Investing Friend!!
I hope you are doing well!!
If not, I have special report on a cutting edge technology for *both* your reading and streaming pleasure!!
The report is below, and the stream will be Wednesday at 10 am:
https://www.youtube.com/@InvestorsClubJoe/streams
We’ll do it this way so you get the reports a full day ahead of time, with the stream the following morning. So we will begin daily streaming with this one tomorrow.
Apologies for the delay, but I think this is a better schedule, so you have time to consider everything before we speak about ideas publicly.
So let’s get into it!
We talked a while back about stablecoins, and how they have an important role in the future of finance.
Stablecoins are cryptocurrencies that are pegged to a stable asset like the U.S. dollar. So for example one USDT Tether stablecoin is worth $1. And it's pegged there with algorithms that do things like increase or decrease supply in real time.
Stablecoins offer enormous advantages over traditional systems:
No major price swings, solving a huge problem with using crypto
Transactions are super-duper cheap – like a fraction of a cent
Transactions are near instant
Transactions cross any border with no middleman, so international payments are a major use case
Users don’t even need a bank account
And stablecoins are being embraced as a savior by budget-challenged governments like the US.
That is because in order for stablecoins to be reliable they have to be backed by the real asset, in Tether’s case the US dollar. So Tether buys up a lot of short-dated Treasuries to back the coins, and thereby helps fund the government.
And it’s big business for the government, and growing quickly. At the end of 2024 Tether had $113B of US Treasuries – compared to China’s $767B accumulated over many years.
How quickly are stablecoins growing?
Estimates are that the stablecoin market is currently worth about $240B. By 2030, the midpoint projection is about $2.4T
So all of the excitement around stablecoins is no longer theoretical. Stablecoins are blowing up.
Tether is the largest US dollar stablecoin, and its parent company made a whopping $13B in profits in 2024. They are private, so no investing there for us.
BUT.
The second largest US dollar stablecoin, and the only other major player, and one with an arguably better reputation, *is* now available for our investing pleasure.
That coin is USDC , and the parent company is Circle Internet Group (CRCL).
Circle is an ambitious company aiming at the top spot (from the prospectus): “Our strategy is to build the largest and most widely used stablecoin network in the world”.
A little color on their ecosystem:
“The value of the Circle stablecoin network grows as more companies and services connect into our network and infrastructure…Altogether, thousands of companies are part of the Circle stablecoin ecosystem:
Wallets and consumer apps…Examples include products from Coinbase, Robinhood, MetaMask, Mercado Libre, Nubank, Coins.ph, and GCash…
Digital Asset Exchanges…
Traditional Exchanges…memorandum of understanding with ICE
Custodians…
Blockchain networks…
Blockchain protocols…
Banks and neo-banks…
Payments companies…
Market makers and liquidity providers”
Circle differentiated itself from the beginning by voluntarily bringing in reputable accounting firms for regular verifications of their numbers. Circle always backs USDC with 100% US dollars (Treasuries).
That is something Tether cannot say. Tether does not do audit type stuff, and they got in trouble for looking for higher returns with some of their funds instead of backing the coins with 100% US dollars (for example buying bitcoin instead of US Treasuries).
So perhaps an opening for the only big and “legitimate” player.
Although, Tether seems to be winning hearts and minds even more than dollars:
And this points to a fundamental difference between the two companies.
Circle was backed by Goldman Sachs, and then sold an enormous part of itself to Coinbase. Along with the stringent voluntary oversight, it seems Circle is focusing more on institutional adoption, and tether is focusing on the everyman.