The dollar versus USDC: Old money, Open Money

This post compares the US dollar and USDC to explore the benefits of open, programmable money and how stablecoins are reshaping global finance

Comparing the US dollar to USDC — the most widely adopted dollar-backed stablecoin — is one of the clearest ways to understand the promises and tradeoffs of Open Money. When we put these two side by side, we see not just a contrast in technologies, but in underlying systems: centralized vs decentralized, analog vs programmable, closed vs open.

Let’s start with the US dollar.

The US dollar is the dominant reserve currency in the world. It underpins global trade, stores value across international central banks, and facilitates everyday purchases from gas stations to grocery stores. A few key features define the dollar:

It is legal tender, issued by the U.S. Treasury and managed by the Federal Reserve.
It derives its value from trust in the U.S. government and its control over monetary policy.
Dollars exist in both physical and digital formats (cash and bank balances).
The system is centrally governed, relying on tools like interest rates, inflation targeting, and the money supply to influence the economy.
Moving dollars across borders is slow, costly, and depends on a tightly controlled banking infrastructure.
It is not universally accessible — many people around the world are locked out of dollar-based systems due to geography, politics, or regulation.
The system is deeply intertwined with domestic and international politics.

In contrast, USDC is a blockchain-based stablecoin issued by a private company, Circle. On the front end, it’s a digital asset that exists on public blockchains like Ethereum, Solana, and others. On the back end, it’s backed 1:1 by U.S. dollars and short-term U.S. Treasury assets, held in reserve.

Here are some defining characteristics of USDC:

It is globally accessible, 24/7, with no reliance on banks or borders.
It is auditable and transparent on-chain, although the reserves are managed by Circle, introducing a layer of centralization.
It is entirely digital — there’s no physical version — and it is not legal tender.
While governed by code on the blockchain, USDC’s backing still depends on the U.S. financial system.

Where USDC shines

The clearest advantages of USDC are speed, cost, and accessibility. It can move money instantly, at any time, without waiting for banking hours or holiday closures. Transactions can be cheaper too — although this depends on the blockchain being used, and wallets or protocols may still charge fees.

But maybe the most transformative feature of USDC is that it’s programmable.

As code-based money, USDC can integrate directly into decentralized applications (dApps), smart contracts, and automated financial systems. This opens the door to entirely new kinds of financial workflows. Imagine:

Instant payroll based on task completion.
Royalty payments triggered automatically with every sale.
Escrow contracts that release funds only when conditions are met.
Cross-border lending protocols that bypass intermediaries entirely.

Let’s say you publish a book titled Open Money through a digital publisher. Each time someone buys the book, USDC could automatically distribute royalties — split between you and the publisher — in real time. No more waiting for quarterly payouts.

A symbiotic relationship

The takeaway is that USDC doesn’t replace the dollar — it extends it. It magnifies what the dollar can do in a digital, open, and programmable environment. But it still relies on the dollar and the U.S. Treasury to function as designed. If the peg breaks or trust in the reserve evaporates, USDC’s stability disappears with it.

So for now, the relationship between the US dollar and USDC is mutually beneficial. One brings the trust of legacy finance; the other brings the agility of open technology. Together, they point to a future where money is not just stored and sent — but built upon.

This post is part of the Open Money Project, an ongoing series that forms the basis of a longer work. Subscribe to get a weekly update as it unfolds.