Scarcity and Stability: Bitcoin, the Dollar, and USDT
Bitcoin is scarce; the dollar is stable; USDT makes the dollar portable. PlanB, creator of the Stock-to-Flow model, on how these tools play different roles in a saver's toolkit.
People often lump all of crypto together, but the tools do different jobs. Bitcoin is defined by scarcity — a fixed, predictable supply schedule set by its halvings. A dollar-pegged stablecoin like USDT is defined by stability — it is engineered to hold one dollar of value. Confusing the two leads to bad decisions.
Understanding the difference is the start of using each well.
Two different jobs
Scarcity and stability serve different needs. A scarce asset can preserve or grow purchasing power over long horizons, but it is volatile in the short term. A stable asset holds its value day to day, which is what you want for spending, saving in the near term, or sitting out volatility. USDT does the second job: it makes the dollar portable and holdable on open networks.
For many savers, the practical answer is not one or the other but knowing which tool fits which purpose.
Where USDT fits
For someone in a high-inflation economy, a stable digital dollar is the immediate, everyday tool — a way to stop the bleeding of a depreciating local currency. USDT is the most accessible version of that today, particularly through peer-to-peer markets. What role scarcer assets play alongside it is a separate, longer-horizon decision.
FAQ
What is the difference between Bitcoin and USDT? Bitcoin is a scarce asset with a fixed supply and high short-term volatility. USDT is a dollar-pegged stablecoin engineered to hold a stable value. They serve different purposes — long-term scarcity versus day-to-day stability.
Why hold a stablecoin instead of a scarce asset? For near-term stability: spending, saving over short horizons, or avoiding volatility. A dollar-pegged stablecoin like USDT holds its value day to day, which a volatile asset does not.
Is USDT a good store of value? For holding stable dollar value in the near term, especially against a depreciating local currency, USDT is widely used. It carries issuer and platform risks and is designed to track the dollar, not to appreciate.