In the grand narrative of human progress, we often imagine that our fundamental systems—law, democracy, money—evolved through careful design and rational planning. The reality, as any historian will tell you, is far messier. Most of our critical infrastructure consists of ingenious hacks, clever workarounds, and historical accidents that somehow crystallized into permanence.
Consider the system by which money moves across borders today. When a business in Tokyo sends payment to a supplier in São Paulo, the money doesn't actually "move" at all. Instead, a baroque dance of messages and ledger entries unfolds across multiple banks, each maintaining accounts with others in an intricate web of bilateral relationships. This system—correspondent banking—is itself a centuries-old hack, a workaround developed when the fastest communication technology was a man on a horse.
Today, we are witnessing something remarkable: one hack is replacing another. Stablecoins, a form of cryptocurrency pegged to traditional currencies, are rapidly becoming a new rail for global payments. Stripe's recent $1.1 billion acquisition of Bridge, a stablecoin infrastructure company, signals that this transition has moved from experimental to inevitable. To understand why this matters—and why it's happening now—we need to examine both hacks with the dispassionate eye of an anthropologist studying the peculiar customs of international finance.
The correspondent banking system is a masterpiece of pre-digital engineering. Faced with the impossible task of moving physical gold across oceans—risky, slow, expensive—medieval merchants invented a clever workaround. Banks would maintain accounts with each other, and instead of moving money, they would simply adjust ledger entries. A Medici bank in Florence could "send" florins to London by instructing their London correspondent to debit their account and credit the recipient.
This system solved a real problem elegantly, given the constraints of the era. But like many hacks that become infrastructure, it accumulated layers of complexity over centuries:
The result is genuinely absurd when examined with fresh eyes. In 2024, sending $1,000 from New York to London—two cities separated by five hours of flight—takes three to five business days and costs $40. The money doesn't move; rather, a series of IOUs are created and destroyed across multiple institutions, none of which can see the full journey.
This isn't a system anyone would design. It's what economists call a path-dependent outcome—a historical accident that became locked in through network effects and regulatory crystallization.
Here we encounter one of economic history's most delicious ironies. Stablecoins were not designed to solve the global payments problem. They emerged from cryptocurrency speculation as a practical necessity—traders needed a way to move value between exchanges without converting back to traditional banking. The volatility of Bitcoin made it useless as a medium of exchange, so the crypto ecosystem invented synthetic dollars that lived on blockchains.
This is evolutionary exaptation at its finest—a feature evolved for one purpose that proves useful for something entirely different. Feathers evolved for warmth before enabling flight. The human thumb evolved for gripping branches before enabling tool use. And stablecoins evolved for crypto trading before enabling global payments reform.
The sequence of events is crucial to understanding why this worked when decades of deliberate efforts failed:
By 2024, stablecoins were processing $15.6 trillion in annual volume—comparable to Visa's throughput. The speculative frenzy that many dismissed as worthless had accidentally funded the creation of a parallel financial system.
What makes stablecoins particularly clever as a hack is their delightful circularity. They work by maintaining reserves in the very traditional banking system they're meant to improve upon. Circle, the issuer of USDC, keeps billions in dollars and Treasury securities at traditional banks. The stablecoin is, in essence, a more efficient receipt for money sitting in the old system.
But this circularity is a feature, not a bug. It provides the backward compatibility that makes adoption possible while enabling the efficiency gains of blockchain settlement.
The economist Thomas Schelling introduced the concept of focal points—solutions that people tend to converge upon without explicit coordination. The correspondent banking system represents one of the most entrenched Schelling points in human civilization. Every bank knows that every other bank will be reachable through SWIFT. It's suboptimal but stable.
For decades, the payments industry faced an impossible coordination problem. Everyone knew the system was inefficient, but:
The genius of stablecoins—though genius implies intention where there was mostly accident—is that they created a new Schelling point that required no coordination at all. Because stablecoins emerged from the crypto ecosystem rather than from banks or governments, they carried no institutional baggage. They belonged to no one, which meant they could belong to everyone.
Critically, stablecoins were already operational and battle-tested from years of crypto trading before traditional businesses noticed them. The infrastructure existed. The liquidity was there. The technical bugs had been worked out. All that remained was for businesses to realize they could use this "crypto thing" for regular payments.
This is profoundly different from every previous attempt at payments reform, which required stakeholders to agree first and build second. Stablecoins inverted the sequence: build first (for a different purpose), then let stakeholders discover the utility. No coordination required—just individual actors making rational decisions to use a more efficient system.
Critics often assume that stablecoins represent regulatory arbitrage—a way to avoid the rules that govern traditional finance. The reality is more nuanced and, frankly, more interesting. Stablecoin issuers face the same anti-money laundering (AML) and know-your-customer (KYC) requirements as traditional banks. In many jurisdictions, they face additional obligations.
What stablecoins actually provide is regulatory clarity through technological transparency. Every transaction on a blockchain is permanently recorded and publicly visible. This is not a feature that those seeking to launder money typically appreciate. The blockchain provides an immutable audit trail that makes traditional banking records look positively opaque by comparison.
The Financial Action Task Force (FATF), the global standard-setter for anti-money laundering, has extended its guidelines to cover what it calls Virtual Asset Service Providers—including stablecoin issuers. The US Treasury treats them as money service businesses. The European Union's Markets in Crypto-Assets (MiCA) regulation provides comprehensive oversight. Far from being unregulated, stablecoins operate in an increasingly dense thicket of rules.
The practical improvements are striking enough to overcome considerable skepticism:
These are not marginal improvements. For a small business importing goods from overseas, the difference between paying 5% in fees and 0.5% might determine profitability. For a Filipino nurse sending money home, instant settlement means her family doesn't wait anxiously for days wondering if the transfer will complete.
We might ask whether replacing one jury-rigged system with another represents genuine progress. The answer, I would argue, is an unqualified yes. Human civilization advances not through perfect solutions but through progressively better approximations. The wheel was a hack for dealing with friction. Agriculture was a hack for food scarcity. Democracy is a hack for organizing collective decision-making.
The stablecoin infrastructure being built today is undoubtedly a hack—a clever workaround that uses blockchain technology to create more efficient receipts for traditional dollars. But it's a better hack than correspondent banking, just as email was a better hack than fax machines for sending documents, and fax machines were a better hack than postal mail.
Perhaps the most convincing evidence that stablecoins represent genuine progress is how boring they're becoming. Revolutionary technologies tend to follow a predictable arc: initial excitement, speculative excess, disillusionment, and then—for the ones that actually work—invisible ubiquity.
Stablecoins are entering this final phase. Major payment companies are quietly integrating them. Banks are exploring their use for settlement. Businesses are adopting them not for ideological reasons but for the mundane goal of saving money on payment processing.
In ten years, the distinction between stablecoin and traditional payment rails may become as irrelevant as the distinction between email sent over cable versus fiber optic networks. The hack will have been absorbed into the infrastructure, indistinguishable from any other payment method except for being faster and cheaper.
The transition from correspondent banking to stablecoin rails illustrates a broader principle about how human systems evolve. Progress rarely comes from wholesale replacement of existing systems. Instead, it emerges from clever hacks that provide backward compatibility while enabling forward progress.
The correspondent banking system was itself once a brilliant innovation—a hack that enabled global commerce in an age of sailing ships. That it seems absurdly inefficient today doesn't diminish its historical importance. Similarly, stablecoins may one day seem like a quaint intermediate step toward some yet-unimagined monetary system.
But for now, they represent something precious: a working solution to a real problem. They're enabling millions of transactions that would otherwise be too expensive or too slow. They're providing financial access to those excluded from traditional banking. They're forcing a fossilized industry to contemplate efficiency for the first time in decades.
The story of stablecoins is not one of Silicon Valley disruption or cryptocurrency revolution. It's the older, quieter story of human ingenuity finding marginally better solutions to persistent problems. It's the story of one hack replacing another, each iteration bringing us closer to the impossible ideal of frictionless global commerce.
In the end, the measure of any financial innovation is not its elegance but its utility. By that measure, stablecoins—hack though they may be—represent genuine progress. They are making the world incrementally better, one transaction at a time. And in the grand ledger of human advancement, incremental better is how we've always moved forward.
The author wishes to thank the medieval merchants who invented correspondent banking, the computer scientists who developed blockchain technology, and the financial engineers who had the audacity to combine them. All of human progress stands on the shoulders of previous hacks.