Stablecoins are killer app—BoA considers joining the party

Looking at the use cases for blockchain technology so far, it’s easy to conclude that stablecoins are the killer app.

Tens of billions in value were sent to East Asia via stablecoins in 2024, and with United States President Donald Trump signaling stablecoin legislation is a top priority in January, the stablecoin megatrend is just getting started.

While large stablecoin issuers like Tether face an existential crisis as we move into a more regulated, mature era for digital currencies, new ones are popping up everywhere. Just last week, Bank of America (BoA), the second largest bank in the U.S., confirmed it was considering a stablecoin launch.

“And so if they make that legal, we’ll go into that business. So you’ll have a Bank of America coin and a Bank of America US dollar deposit, and we’ll be able to move them back and forth. Because (until) now it hasn’t been legal for us to do it, but it’s just then like another foreign currency. The question of what it’s useful for is going to be interesting.” – BoA CEO Brian Moyniham

JP Morgan (NASDAQ: JPM) launched its stablecoin back in 2020, and last year confirmed transactions were “exploding.” Now, with a few dozen banks across America and many more across the world testing and toying with the idea of stablecoins, blockchain and distributed ledger technology (DLT) transactions could well explode, too.

There’s a problem that hasn’t been reckoned with yet

At the CoinDesk Consensus event in 2024, Umar Farooq, who heads up JPM’s Onyx division, recognized that while demand for the bank’s stablecoin was high, “one of the macro limitations is silos.”

While Farooq was talking about how money, securities, and commodities were in separate silos and it isn’t easy to transfer between them seamlessly, the same applies to stablecoins and digital currencies on different blockchains. Often, banks and institutions launch private blockchains or segment off permissioned sections of Ethereum so they can control all transactions.

Aside from being pointless, this creates the same problem the legacy financial system suffers from; fragmentation and walled gardens prevent seamless movement across asset classes.

The same thing happened in the early days of the Internet. Multiple private networks, including ARPANET, DECnet, UUCP, Fidonet, and others, competed with each other from the 1960s to the 90s. Eventually, TCP/IP won out due to a combination of openness, interoperability, scalability, decentralization, the world wide web, and the mass adoption that followed Tim Berners Lee‘s invention.

The same thing is playing out again in the blockchain industry. There has been a Cambrian Explosion in blockchains, DLTs, hashgraphs, and other networks. Some are public, and others are private, and the race for dominance is well and truly underway.

As with the web, everything will eventually settle on one ledger, and for the same reasons. The current blockchain ecosystem of unscalable blockchains, layer two solutions, side chains, bridges, and whatever else is a mess. It can never amount to anything, and the traditional systems are still far better than anything ‘crypto’ has to offer.

Imagine stablecoins at scale on an unboundedly scalable ledger

Since stablecoins appear to be the first major use case for digital currencies, the next phase will logically be the application layer. Rather than being used to send, receive, and cash out fiat money, stablecoins can be used to access all kinds of blockchain applications, creating on-chain economies at scale.

Why hasn’t it happened yet? Technological limitations have prevented it. Ethereum can only do 20 transactions per second at the base layer, the fees fluctuate from a few dollars to hundreds depending on demand, and its convoluted, tangled web of layer two solutions leaves even computer-literate people scratching their heads.

Blockchain games, finance apps, on-chain exchanges, real-world assets (RWAs), and apps providing services like supply chain tracking cannot reach their full potential on these broken blockchains. For them to exist at a global scale, be fully interoperable, and accept stablecoin payments, they must exist on a single unboundedly scalable blockchain capable of transactions worth fractions of a cent.

Thankfully, such a vision is not lost, and there is a blockchain that can handle it. The BSV blockchain will be able to handle one million transactions per second at average fees of $0.00001 per transaction after its Teranode upgrade. Simple smart contracting languages like sCrypt make it easy for developers to jump in and develop apps that can use micropayments in either BSV or the MNEE stablecoin.

When all of this goes live, there will be few practical limitations to what blockchain developers can build. Independent developers, banks, businesses, and governments of all kinds will finally have a blockchain capable of unbounded scaling and capable of truly tiny transactions. The sky will be the limit as to what can be built.

Stablecoins are the killer app so far, but they’re not the be-all and end-all. They are one important piece in a larger picture. However, that entire picture depends upon a specific type of foundation: a single, scalable, low-fee blockchain with a roadmap to scale to global dimensions.

So, while we’re finally seeing some movement at the regulatory level in the world’s largest economy, that won’t change the technical limitations of blockchains like BTC or Ethereum. When builders hit the inevitable walls on them, there will only be one option: the unboundedly scalable BSV blockchain.

Watch | Spotlight On: Centi Franc—the truly stable stablecoin

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