Decrypting Crypto’s Journey: From Speculative Tokens to Stablecoins

Early in my career, shortly after I had begun earning, my family doctor suggested that I meet a woman with what she described as a compelling investment opportunity. In India, family doctors often serve as trusted advisers well beyond healthcare, and their recommendations are rarely taken lightly.

The woman spoke about investing in “rare coins,” explaining that their value would rise because supply was deliberately restricted. When I asked who would ultimately create demand for these coins, her answer was simple: future buyers like me. These coins were neither antique nor issued by any sovereign authority; they relied purely on artificial scarcity and resale to new participants. The model closely resembled a pyramid-style structure, and I chose not to invest.

Bitcoin’s Emergence: Technology Meets Scarcity

Nearly a decade later, in 2010, I read about a transaction in which 10,000 bitcoins were exchanged for two pizzas. While the technology behind Bitcoin, blockchain, was undeniably innovative, the economic questions felt familiar. How was value determined? Did Bitcoin have intrinsic worth? Was it meant to function as money or as a speculative asset?

At the time, such questions were often dismissed. Crypto was widely portrayed as the inevitable future of finance, and early corporate transactions settled in cryptocurrency were celebrated as signs of a coming global shift.

The Pandemic Boom: Liquidity, Volatility, and Adoption

That vision of cryptocurrency becoming the default medium of everyday transactions has, thus far, not materialised. However, during the COVID-19 period, Bitcoin and other cryptocurrencies experienced extraordinary price appreciation. Quantitative easing across major economies flooded markets with liquidity, helping propel Bitcoin to all-time highs. Growing institutional and retail participation further amplified this momentum.

Crypto assets increasingly came to be viewed as alternative investments across retail, institutional, and wealth segments. Their pronounced volatility created trading opportunities, attracting interest from banks and financial institutions eager to offer crypto-linked products to clients.

Limits of Crypto as Currency

Despite this growth, the post-pandemic trajectory of cryptocurrencies suggests that they are unlikely to replace national currencies for everyday transactions. Their primary contribution has been technological. Blockchain, the foundational innovation behind crypto, has demonstrated significant potential as an infrastructure layer for modern financial systems.

Stablecoins: A More Viable Path Forward

Stablecoins have emerged as one potential solution. These are digital representations of pegged currencies, designed to maintain a stable value. For example, XSGD is a privately issued stablecoin intended to be redeemable one-to-one with the Singapore dollar. By being backed with reserves and operating within regulatory frameworks, stablecoins address the absence of underlying assets and significantly reduce the extreme price volatility associated with traditional cryptocurrencies.

As a result, stablecoins are more suitable for payments and settlements, as users are not exposed to sharp value fluctuations. At the same time, they enable faster and more efficient settlement processes through blockchain-based infrastructure. That said, risks remain—particularly those related to issuer credibility and the management of the reserves backing these instruments.

The Enduring Value of Blockchain

Blockchain technology has emerged as the clear winner of the crypto experiment. Banks and regulated financial institutions are increasingly establishing stablecoin or tokenised-cash desks to meet growing demand for faster, digital settlement solutions. Transaction volumes continue to rise, pointing to sustained institutional interest.

Conclusion: The Future of Crypto as an Asset Class

The evolution of crypto raises an important question for investors and policymakers alike: where does this leave traditional cryptocurrencies? As investment assets, many appear to have lost momentum unless supported by tangible underlying value.

Blockchain, however, has clearly endured. Its application in stablecoins, tokenised cash, and faster settlement infrastructure suggests that while speculative crypto assets may fade, the technology they introduced will continue to shape the future of financial markets.

The crypto experiment may not have rewritten money, but it has permanently rewritten financial infrastructure. The real disruption lies not in tokens, but in the rails beneath them.