Bitcoin Journal
Bitcoin vs Stablecoins: Bitcoin is an Unreplicable Lifeline in Authoritarian Regimes
Eight years in the past, I wrote a e book about pitching know-how. The core lesson was easy: To persuade skeptics, you should present your answer’s worth isn’t simply higher — it’s uniquely higher. Years later, as I started advocating for Bitcoin’s position in humanitarian crises, this lesson resurfaced with urgency. Skeptical buddies requested “Can’t stablecoins do the identical?”, “What’s so distinctive about Bitcoin?”
The reply lies not in idea, however within the protest rallies of Abuja, the blackouts of Caracas and the underground colleges that ladies secretly attend in Kabul — locations the place 1.7 billion unbanked, 250 million battling excessive inflation or hyperinflation and a pair of.3 billion beneath authoritarian rule combat to outlive. These tales not often breach Western media algorithms, which act as a shadow-ban of the growing world, favoring headlines about ETFs over existential monetary struggles.
It doesn’t take too deep a glance into these components of the world to find that Bitcoin shouldn’t be solely very important however uniquely very important in a approach stablecoins and different altcoins don’t and can’t replicate. Let’s have a look at three nations which are adopting Bitcoin over stablecoins and why.
Nigeria: The place Sovereignty Outweighs Stability
Context: 223 million individuals, 95 million dwell on lower than $1.90 a day. 23.71% inflation (April 2025), 18.3-20 million kids not at school. Solely 30% have entry to secure ingesting water.
In 2024, Nigeria confronted extreme financial and political upheaval, with the native foreign money naira crashing to a file 1,643 per greenback by August — down from 460 in early 2023. This not solely eroded financial savings and buying energy, it eroded belief within the authorities and led to widespread protests over hovering inflation and gas prices. These protests have been triggered by widespread anger at authorities financial mismanagement and insurance policies that did not halt the financial slide.
Occasionally a steady foreign money, the naira’s collapse left households and companies struggling to afford imports right into a dollar-dependent economic system. Public frustration intensified and with it, political instability. This risky local weather of foreign money devaluation, restricted monetary entry and social unrest set the stage for Nigerians to show to various monetary programs like cryptocurrencies, looking for options to safeguard their wealth amid a crumbling financial framework.
However the authorities wasn’t about to make that simple for its residents. Nigeria’s authorities restricted stablecoin. “Illicit flows,” aka cash laundering, was typically used as the federal government’s official motive for anti-stablecoin actions. Extra doubtless the Nigerian authorities took motion as a result of they seen stablecoins as undermining its financial coverage by enabling unregulated capital flows and foreign money substitution, decreasing its central financial institution’s management over cash provide and trade charges.
Little doubt, bitcoin might be seen as undermining financial coverage in some comparable methods, the distinction being, Nigeria’s authorities was not in a position to curtail bitcoin’s utilization as successfully as a result of its decentralized nature.
The particular actions Nigeria’s authorities took got here in three kinds:
- Banking Restrictions and U.S. greenback provide shortages had the impact of limiting fiat on-ramps/off-ramps for stablecoins like USDT, which required KYC-compliant exchanges. P2P bitcoin buying and selling soared after the restrictions, as customers bypassed banking controls utilizing non-public wallets and DEXs.
- Regulatory Crackdowns: Nigeria’s authorities took particular authorized motion to sue unlicensed USDT merchants. Nigerian authorities then launched a broader assault, accusing crypto-trading platform Binance of “exploitation, devaluation of the naira and cash laundering.”
- Premiums and Volatility: Regulatory pressures and FX shortages doubtless inflated premiums, making them much less sensible than bitcoin, which operates with out centralized dependencies.
All three measures — banking restrictions, regulatory crackdowns and premiums/volatility — impacted bitcoin quite a bit much less than it impacted stablecoins. Stablecoins’ reliance on centralized issuers, banking rails and KYC-compliant exchanges made them susceptible to authorities actions, as we noticed when USDT buying and selling was disrupted. In contrast, Bitcoin’s decentralized, permissionless nature enabled Nigerians to bypass restrictions through P2P platforms and personal wallets, sustaining its adoption.
Afghanistan: How Bitcoin Was a Monetary Lifeline After the Taliban Takeover
Context: Taliban rule, most girls are unbanked, Afghanistan’s foreign money devalued 50% between 2021 and 2022. Eighty-five % dwell on lower than $1 a day, 80% of school-aged Afghan ladies and younger girls are out of faculty.
When the Taliban seized management in August 2021, Afghanistan’s banking system collapsed beneath sanctions, leaving residents — particularly girls — with few choices. Conventional remittance networks like Hawala charged exorbitant charges (5-20%), whereas frozen central financial institution reserves made greenback entry practically inconceivable. On this vacuum, bitcoin emerged as a crucial device for survival. In 2021, Bitcoin Journal beforehand reported how girls have been safeguarding Bitcoin seed phrases as a final line of economic protection. After the Taliban banned crypto in 2022, peer-to-peer bitcoin buying and selling continued underground.
Why Bitcoin Outperformed Stablecoins in Disaster
Stablecoins, reliant on centralized issuers and dollar-backed banking rails, faltered beneath Afghanistan’s distinctive constraints. U.S. sanctions froze $7 billion in central financial institution funds, which lower off the greenback liquidity wanted for stablecoins like USDT. Whereas Forbes India famous remoted instances of stablecoin use for salaries, most Afghans discovered them unusable. In the meantime, sanctions blocked fiat conversions and the Taliban’s November 2021 international foreign money ban additional restricted entry. Bitcoin, in contrast, as soon as once more thrived exactly due to its decentralized design: no intermediaries to freeze transactions, no KYC to reveal customers and a worldwide community that resisted shutdowns. The place stablecoins have been hobbled by their ties to conventional finance, Bitcoin enabled direct, pseudonymous transfers.
Venezuela: Shortage Trumps “Stability”
Context: The Venezuelan bolívar has misplaced 99.99% worth since 2018; 76% of Venezuelans dwell on $1.90/day. Over 7.7 million Venezuelans have fled the nation since 2014 as a result of financial collapse and political instability. Over 10% of youngsters beneath 5 in Venezuela undergo from stunting as a result of continual malnutrition.
Carlos, a Caracas mechanic, measures his life in bolívars — or moderately, the absence of them. Since 2018, Venezuela’s foreign money has shed 99.99% of its worth, Carlos explains, Carlos is an instance of many Venezuelans who used bitcoin, not stablecoins, to protect wealth because the bolívar continued to lose worth. The federal government launched strict capital controls into the market in order that even in the event you by some means handle to earn USD, you possibly can’t get the cash transferred to your checking account.
Bitcoin supplies a monetary lifeline for individuals like Carlos, not like stablecoins which are pegged to a USD that itself misplaced 18% in buying energy since 2020.
That’s proper: Individuals like Carlos, schooled within the laborious knocks of foreign money hyper-debasement, realized sooner than many within the West that stablecoins should not actually steady.
Stablecoins by their title current the looks of being a secure harbor, as a result of they’re pegged to the USD, however that is akin to anchoring a ship to a midsized rock on the seabed. It is a lot higher than not anchoring your ship in any respect, since you keep away from the quick tempestuous seas of your native foreign money’s hyperinflation. Nonetheless, over time you continue to slowly drift into the open ocean of greenback debasement. As a result of the USD itself loses buying energy, this slowly however inexorably drags stablecoin holders towards the identical inflationary waters they sought to flee.
Venezuela’s lesson mirrors Nigeria’s: in economies gutted by hyperinflation, sluggish erosion of wealth is deadlier than volatility.
How Governments Goal Stablecoin Liquidity in Authoritarian Regimes
What we’ve seen in Afghanistan, Nigeria and Venezuela should not anomalies. All over the world, authoritarian governments don’t simply dislike stablecoins — they systematically dismantle entry to them. Their techniques fall into six classes. Let’s check out these, utilizing examples from authoritarian regimes world wide.
- Proposed Stablecoin Bans (e.g., Brazil): Criminalizing stablecoin buying and selling or funds.
- Banking Blockades (e.g., China): Severing fiat gateways to freeze stablecoin and crypto liquidity. Whereas the ban in idea utilized to Bitcoin too, the Bitcoin ban was not totally enforced as a result of Bitcoin’s decentralized structure. Reuters for instance commented, “repeated (Bitcoin) prohibitions spotlight the problem of closing loopholes and figuring out bitcoin-related transactions.”
- KYC Enforcement (e.g., Hong Kong): Forcing strict identification checks for stablecoin transactions, which discourages use in regimes with heavy surveillance.
- State-sponsored hacks (e.g., North Korea): Drain stablecoin reserves and disrupt market confidence.
- Licensing Strangleholds (e.g., Russia’s proposed guidelines): Imposing strict licensing for stablecoin issuers or platforms, to restrict their operation.
- Surveillance and Arrests (e.g., China’s OTC crackdowns): Monitoring and penalizing anybody concerned in stablecoin buying and selling.
The Lifeline: Why None of These Six Methods Work On Bitcoin
In contrast to stablecoins — which rely on centralized issuers and platforms susceptible to regulation, hacking or shutdown — Bitcoin operates past any authorities’s grasp. Its decentralized community of miners and nodes has no single level of failure, no CEO to strain and no middleman to dam. Whereas authorities can freeze stablecoin transactions or impose strict licensing guidelines, Bitcoin transactions circulate peer-to-peer, bypassing conventional choke factors. Wallets stay non-public, miners are globally distributed and the community resists censorship by design.
Governments could limit stablecoins with relative ease, however Bitcoin’s structure ensures it stays out of their attain.
For instance, Russia has explored cryptocurrencies, together with bitcoin, to bypass Western sanctions — notably for the reason that 2022 Ukraine invasion. State-backed initiatives, like their proposed centralized trade, have been set as much as facilitate cross-border funds in crypto to keep away from SWIFT restrictions and frozen international reserves.
In parallel, Russia’s central financial institution has imposed restrictions on international stablecoins like USDT to tighten management over home monetary flows. On 18 Could, CoinTurk alleged that Russia is now looking for to restrict USDT’s use in home transactions, encouraging the adoption of a state-controlled stablecoin. This aligns with efforts to forestall capital flight, guarantee compliance with AML rules and promote “pleasant” digital property that align with nationwide safety targets.
Why each? Russia’s twin method displays a captivating strategic nuance: They leveraged bitcoin for worldwide sanctions evasion whereas limiting international stablecoins domestically to take care of financial management and scale back reliance on USD-pegged property ( as these are topic to international affect, for instance Tether’s capability to freeze wallets).
On the subject of authoritarian regimes that need strict capital controls, bitcoin is antifragile; stablecoins should not.
The Altcoin Mirage
OK, so stablecoins don’t supply a viable various to bitcoin. However what about different altcoins?
It seems these don’t work so effectively both as a result of centralized altcoins similar to XRP, Solana and Ethereum replicate stablecoins’ deadly flaw: dependency. Builders can reverse transactions (as Ethereum did in 2016), validators can freeze wallets and the usually uncapped provide of altcoins mimic fiat foreign money debasement.
The failure is systemic. For instance, when Nigeria banned Binance in 2024, Solana-based USDC customers discovered themselves stranded, however bitcoin merchants merely pivoted to decentralized exchanges like HodlHodl.
The widespread theme is that stablecoins don’t substitute bitcoin as a result of:
- Inflation hedges require shortage and anchoring to an asset that’s not dropping buying energy itself. Stablecoins lack these two properties.
- USD shortage in international locations similar to Nigeria makes stablecoins unreliable (premiums hit 60%+ throughout FX crunches).
- Political threat: The federal government can’t ban bitcoin, however it might (and does) goal stablecoin liquidity.
Individuals in autocratic nations use bitcoin not regardless of its volatility, however as a result of its sovereignty-preserving properties outweigh short-term value swings. Stablecoins are instruments for transactions; bitcoin is a device for survival.
The Myopia of Privilege
The belief that stablecoins can replicate bitcoin’s utility typically stems from myopia formed by steady currencies, functioning democracies and sturdy banking programs — luxuries international to the two.3 billion individuals beneath authoritarian rule and the 250 million battling excessive inflation or hyperinflation. Western commentators, insulated by privilege, tout stablecoins as “ok,” unaware that in Abuja, a frozen USDT account can erase a household’s financial savings in a single day, or that in Kabul, stablecoins’ reliance on KYC checks excludes 80% of girls from the monetary system. Media algorithms impose an efficient shadow ban by merely not reporting on components of the world deemed “not of curiosity” to the West, exacerbating this disconnect.
To these shaping the narrative: Look past your banking app. Ask your self why Nigerian P2P bitcoin quantity dwarfs France’s, or why Afghan refugees memorize seed phrases as an alternative of trusting Tether. The primary-hand accounts are these. So is the information that exhibits these tales should not anomalies however moderately proof of Bitcoin uniquely assembly a urgent have to an enormous consumer group in a approach stablecoins can’t. Stablecoins and altcoins innovate inside programs which have already failed the World South. Bitcoin exists outdoors them. Higher conclusions start with curiosity, not assumptions. Bitcoin’s worth isn’t in changing stablecoins — it’s in doing what they basically can’t do.
Let’s cease projecting our realities onto theirs and begin listening.
This publish Bitcoin vs Stablecoins: Bitcoin is an Unreplicable Lifeline in Authoritarian Regimes first appeared on Bitcoin Journal and is written by Daniel Batten.