Module 10: Stablecoins and Macro
Crypto in Different Economies
Chapter 11 of 12 · about 5 minutes
11.1 Three countries, three stories
Back in Module 1, Chapter 14, Mint, Node, and Hash discovered that crypto rules differed in each of their countries. Now they compared something else: why people in each place used crypto at all.
In Node's country, with a stable currency and low inflation, most people saw crypto as a speculative investment or a small portfolio allocation.
In Hash's country, many people used crypto partly to send money across borders cheaply.
And in a country Mint had recently visited, where inflation had run above 50% a year, people used dollar stablecoins as a way to save. "For them," Mint said, "it wasn't about getting rich. It was about not getting poorer."
"Macro looks completely different depending on where you stand," said Hash. "And so does crypto's role."
11.2 Crypto in high-inflation economies
In countries with high inflation, the local currency loses purchasing power quickly (Module 1, Chapter 1). People look for ways to protect savings: buying dollars, gold, property, or goods. Where access to dollars is restricted or expensive, dollar stablecoins have become an alternative.
Example. A saver holds 100,000 units of local currency. Over a year, inflation runs at 50%, and the local currency loses about a third of its value against the dollar.
| Keep local currency | Convert to dollar stablecoins | |
|---|---|---|
| Starting value | 100,000 local units | Equivalent in stablecoins |
| Purchasing power after a year | About 67% of the original | Roughly preserved in dollar terms |
| Main risks | Inflation | Stablecoin issuer risk (Chapter 7), access to on and off ramps, regulation |
In this situation, stablecoins don't promise growth. They offer stability relative to a local currency that's losing value.
Adoption studies have often ranked several emerging economies near the top for crypto usage when adjusted for population and income, with stablecoins forming a large share of that activity.
11.3 Remittances and payments
People working abroad and sending money home, called remittances, often pay high fees through traditional channels. Global averages for remittance costs have been around 6% of the amount sent, and much higher in some corridors.
| Method (illustrative, sending $200) | Cost | Speed |
|---|---|---|
| Traditional transfer service | ~$12 (6%) | Hours to days |
| Stablecoin transfer on a low-fee network | Network fee of cents, plus on and off ramp costs | Minutes |
The true cost of the stablecoin route depends heavily on the on-ramp and off-ramp: how easily the sender can buy stablecoins and the recipient can convert them to local currency (Module 1, Chapter 12). Where local exchanges, peer-to-peer markets, or payment apps make this easy, stablecoins can be much cheaper. Where they don't, the savings shrink.
11.4 Capital controls
Some countries restrict how much money residents can move abroad or convert into foreign currency. These are called capital controls. In such places, crypto can offer a way around restrictions, which governments may view as a threat to their monetary policy. This is one reason some countries restrict or ban crypto (Module 1, Chapter 14).
Users in such environments face real legal risks, and should understand local laws carefully.
11.5 Peer-to-peer markets
In countries where banks restrict crypto or exchanges are limited, peer-to-peer (P2P) markets are common: people trade crypto directly with each other, often using local bank transfers or mobile money, usually through platforms that hold the crypto in escrow during the trade.
P2P markets provide access, but carry higher scam risks (Module 2, Chapter 11), such as fake payment confirmations, reversed bank transfers, and frozen bank accounts linked to disputed transactions.
11.6 Crypto in developed economies
In countries with stable currencies and deep financial systems, crypto tends to play a different role.
| Role | Description |
|---|---|
| Speculative investment | Seeking high returns from price appreciation |
| Portfolio diversification | A small allocation alongside stocks and bonds (Chapter 8) |
| Technology exposure | Investing in the growth of blockchain networks |
| Store of value hedge | A hedge against long-term currency debasement |
Here, crypto prices are more influenced by interest rates, liquidity, and risk appetite (Chapters 2 to 4) than by daily needs for an alternative currency.
11.7 Different perspectives on the same asset
| Economy type | Primary crypto use | Main macro concern |
|---|---|---|
| Stable, developed | Investment and speculation | Interest rates and liquidity |
| High-inflation | Dollar savings through stablecoins | Local currency collapse |
| Large remittance flows | Cross-border payments | Transfer costs and access |
| Capital controls | Moving value across borders | Legal restrictions |
"So when someone in one country says crypto is 'just speculation,' and someone in another says it 'saved their family's savings,'" said Node, "they might both be right."
"Exactly," said Hash. "The asset is the same. The economy around it is different."
11.8 Risks for users in fragile economies
People using crypto to escape inflation or capital controls often face higher risks:
- Regulatory risk: sudden bans or restrictions.
- Access risk: exchanges or P2P markets closing.
- Stablecoin risk: depending on issuers outside their country (Chapter 7).
- Scam risk: high demand attracts fraudulent platforms (Module 2, Chapter 11).
- Volatility risk: holding volatile crypto rather than stablecoins can replace one kind of loss with another.
- Custody risk: limited access to secure wallets or education (Module 2).
11.9 Try it yourself
Find your own country's inflation rate over the past five years and its currency's change against the US dollar over the same period. Calculate how 100,000 units of local currency, held as cash, would have changed in dollar terms. Then find the cost of sending $200 to a country of your choice through a traditional transfer service and compare it with the on-ramp, network, and off-ramp costs of using a stablecoin.
Key takeaways from this chapter
- Crypto's role differs depending on the local economy.
- In high-inflation economies, dollar stablecoins are often used to preserve savings rather than to speculate.
- Stablecoins can reduce remittance costs, but on and off ramps determine the real savings.
- In countries with capital controls, crypto can move value across borders but carries legal risks.
- Peer-to-peer markets provide access where exchanges are limited, with higher scam risks.
- In developed economies, crypto is mostly an investment, more sensitive to rates and liquidity.
- Users in fragile economies face extra regulatory, access, stablecoin, scam, volatility, and custody risks.