Venture capitalist Chamath Palihapitiya in Silicon Valley said in the All-In podcast on Friday that SpaceX uses stablecoin to avoid foreign exchange risk. Foreign exchange risk refers to the potential loss that may arise from significant fluctuations in a currency. For example, if a US company has customers in Brazil paying in Real (BRL), the company may incur a loss when converting to US dollars.

Using Stablecoin As A Hedge

According to Palihapitiya, SpaceX collects payments from all Starlink customers in "long-tail countries" and converts them into stablecoin. Starlink, fully owned by Elon Musk's SpaceX, provides satellite internet service.

Palihapitiya stated that the company will convert the stablecoin back to US dollars.

"When they [SpaceX] aggregate those payments in all these long-tail countries, they don't necessarily want to bear foreign exchange risk. They don't want to deal with sending money through the wire."

According to Palihapitiya, stablecoin should become the primary method for cross-border transactions in the United States, which would allow "us to eliminate the entire decaying infrastructure that banks use to slow down and tax a process that should never be taxed."

Stablecoin Providers Compete With Traditional Financial Institutions

Stablecoin providers like Tether and Circle are emerging as formidable competitors that can compete with banks for storage and remittance services.

But it's not just stablecoin providers competing with banks. Stablecoin providers are also competing with traditional payment companies like MasterCard and American Express, Palihapitiya said.

He added that reducing cross-border remittance costs by even 3% - the fee that Stripe is applying - "will benefit global GDP (gross domestic product)."

Aaron Levie, CEO of the enterprise cloud company Box, agrees with Palihapitiya and stated that using stablecoin to replace costly traditional transaction methods is "perfectly reasonable."

With SpaceX run by Elon Musk, a fan of the meme coin DOGE, it is no surprise that the company is using stablecoin. Elon Musk's Tesla has heavily invested in Bitcoin—a clear investment that has paid off as the investment value exceeded $1 billion last month when the price of Bitcoin (BTC) began to soar after Donald Trump's election victory.

Since taking over Twitter and rebranding the social media platform to X, Musk has allowed X users to send Bitcoin and other cryptocurrencies as 'tips' to other users. There is also widespread speculation about the role of cryptocurrency in X's upcoming payment feature.

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