Personal Finance Essentials
Bitcoin was the First Digital Asset. Why Do We Need Any Other Coins?
Bitcoin Started the Revolution
Here’s Why It Couldn’t Finish It
Satoshi invented bitcoin to be a digital currency, something that would replace the currencies created by governments around the world. But that goal failed, for three reasons: bitcoin is dumb, slow and volatile. That’s why more digital coins have been invented – to solve (or avoid) those problems.
Bitcoin is Dumb
When you send bitcoin to someone, they receive it almost instantly. But perhaps you don’t want them to. Maybe you want to pay them only when they fulfill a promise – such as deliver your pizza. Or if some other condition is met – like a certain type of weather, or the outcome of an election or sporting event. Bitcoin can’t do this. That’s why, in 2015, Ethereum was invented.
Ethereum created “programmable money,” also called “smart contracts.” Since digital money is just computer code, you can create rules within that code that dictate the conditions under which your money is transferred. With smart contracts, your money is sent but not received until all the conditions are satisfied – essentially using the blockchain as an escrow account.
Smart contracts could alter how commerce is conducted on a global scale. Complex agreements in finance, manufacturing, real estate, and more can be executed with greater transparency, efficiency, safety, and compliance by protecting buyers from the risk that sellers won’t deliver on their promises.
Bitcoin is Slow
It takes the Bitcoin blockchain seven seconds to process a transaction. That’s about 12,000 transactions per day. By comparison, Visa processes about 150 million transactions each day.
Ethereum can process up to 30 transactions per second, or 2.5 million per day. That’s a lot faster than Bitcoin, but still much slower than Visa. That’s why Solana was invented; it can process up to 100,000 transactions per second, or 8.6 billion per day – 57 times faster than Visa!
But Bitcoin’s slowness is not a bug; it’s a feature. The faster you go, the weaker your security; the Bitcoin blockchain is slow because it needs time to confirm that each transaction is legitimate. The faster you go, the harder it is to validate each transaction. There was $362 billion in global credit card fraud in 2025, according to Jupiter Research, and now you know why. The Bitcoin network, by contrast, has never been hacked.
Bitcoin is Volatile
Bitcoin’s average daily price movement in 2025 was 1.6%, or 2.3 times higher than the S&P 500 Stock Index. Such volatility is unacceptable for a currency, because users want to know that their dollar will always be worth a dollar.
So, someone created Tether, the first stablecoin. Unlike bitcoin and other digital assets whose prices fluctuate, the price of a stablecoin is meant to be always the same – in other words, stable.
Here’s how stablecoins work:
When you move your U.S. dollars to a stablecoin, the stablecoin’s issuer gives you an equivalent number of stablecoins. If you decide to buy USDC, the US Digital Coin issued by the stablecoin provider Circle, your $100 becomes 100 USDC. Circle then uses your money to buy one hundred U.S. Dollars or $100 worth of U.S. Treasury Bills. Either way, Circle provides a one-to-one ratio of coin-to-dollar. In practice, then, the stablecoin is the same as having U.S. Dollars.
But why bother if stablecoins and dollars have the same value? Why not just use the dollars you already have?
The reason is simple: dollars operate within the federal financial system. You need a bank account, and you can send money only within that bank’s rules, which are time-consuming and costly. With stablecoins, you can transfer money 24/7/365, virtually free.
As of Dec. 31, 2025, the stablecoin market was worth $300 billion; Citigroup predicts it could reach $4 trillion by 2030. The federal government is a major proponent of stablecoins; the GENIUS Act of 2025, which governs stablecoins, was the first crypto bill ever passed by Congress (it was signed into law by President Trump).
Many policymakers support stablecoins because the U.S. dollar is the dominant currency in the global economy, and they want it to stay that way. By encouraging consumers worldwide to use stablecoins, which invest their proceeds into U.S. Dollars and T‑Bills, continued dominance by the U.S. on the global economy is assured.
Do Stablecoins Threaten Bitcoin and Other Digital Assets?
No, just as PayPal and money market accounts don’t threaten the stock market. Stablecoins serve as a vehicle to store and send money without worrying about price volatility. Bitcoin, on the other hand, is of interest to investors who want the value of their holdings to rise. The two are unrelated – and thus not a competitive threat to each other.