In an episode of the All-In podcast on Friday, Silicon Valley venture capitalist Chamath Palihapitiya revealed that SpaceX uses stablecoins to avoid foreign exchange risks. Foreign exchange risk refers to potential losses resulting from sudden changes in currencies. For instance, a US company dealing with Brazilian clients paying in Real (BRL) might suffer losses during conversion to USD.
To mitigate such risks, Palihapitiya explained that SpaceX, through its wholly-owned subsidiary Starlink, collects payments from all its international customers in “long-tail countries” and converts them into stablecoins. Starlink offers satellite internet services. The company then reconverts the stablecoins back into dollars within the United States.
As Palihapitiya sees it, using stablecoins for cross-border transactions could replace much of the existing banking infrastructure in the US. This shift would enable us to eliminate outdated bank systems designed to slow down and tax processes that shouldn’t be taxed in the first place.
Stablecoin providers like Tether and Circle are gaining ground against traditional financial institutions. They’re not only competing with banks but also established payment giants such as MasterCard and American Express. According to Palihapitiya, cutting the cost of cross-border transactions by even 3%, similar to what Stripe charges, would significantly boost global GDP.
Aaron Levie, CEO of enterprise cloud firm Box, agrees with Palihapitiya’s viewpoint, stating that stablecoins replacing expensive conventional transaction methods makes perfect sense. It’s worth noting that SpaceX, led by Elon Musk who is known to support meme coin DOGE, utilizes stablecoins due to his interest in cryptocurrency. Furthermore, Elon Musk’s Tesla made substantial investments in Bitcoin – an investment that has proven profitable with its value reaching over $1 billion recently amidst rising BTC prices following Donald Trump’s election win. Since taking over Twitter and transforming it into X, there have been widespread speculations regarding crypto’s involvement in X’s forthcoming payments feature too.
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Source: cryptoslate.com
