In an episode of the All-In podcast recently, venture capitalist Chamath Palihapitiya revealed that Elon Musk’s SpaceX utilizes stablecoins to avoid exposure to fluctuating currency rates. This practice, known as foreign exchange risk, can lead to companies losing out on profits when they need to convert non-USD currencies back into US dollars. By collecting payments in stablecoins from Starlink customers across “long-tail” countries, SpaceX mitigates these potential losses before reconverting the funds back to USD within the United States.

Palihapitiya believes that stablecoins should soon become the main mode of international transactions within the country, allowing us to break free from outdated banking systems that impose unnecessary fees and slow processes on transactions that shouldn’t be taxed in the first place.

As competitors against traditional banks, stablecoin providers such as Tether and Circle are gaining ground quickly. Not only are they battling established banking institutions, but they are also squaring up against major payment service providers like Mastercard and American Express. Palihapitiya estimates that cutting transaction costs by just 3%, similar to what Stripe currently charges, could significantly boost global economic output.

Fellow podcast guest Aaron Levie, CEO of cloud enterprise firm Box, expressed his agreement with Palihapitiya’s viewpoint, stating that stablecoins replacing legacy transaction methods makes perfect sense. With Elon Musk being a well-known advocate for meme coin DOGE, it isn’t surprising to learn that his company, SpaceX, employs stablecoins as part of its operations. Furthermore, Tesla made substantial investments in Bitcoin (BTC), seeing an impressive return on investment once the price of BTC skyrocketed post-Donald Trump’s electoral win. More recently, Musk introduced features enabling Bitcoin and other digital assets to be sent as tips through his newly revamped social media platform X. Rumors continue swirling regarding the role crypto may play in X’s upcoming payment system features.

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Source: cryptoslate.com