Banks will not lose customers to stablecoins, but to apps that use them

Bank customers won’t switch to stablecoins. They’ll switch to software that uses stablecoins.

That’s one reason stablecoins’ impact on bank deposits is so hard to predict. The main drivers aren’t going to be customer preferences for one form of money over another. They’ll be the contingent factors that shape developer adoption -- more like the dynamics that drive which software platforms or frameworks take off.

Some big unknowns:
❓What will be the “killer apps” for blockchain-based payments?
❓Which financial infrastructure stacks will early builders pick when making architectural decisions?
❓Will a particular service stand out with a better developer experience? A more generous free tier? A more accessible or expressive smart contract language?
❓If such dominant platforms emerge, will they enable building with stablecoins, tokenized deposits, or both?

True: there are use cases where stablecoins are intrinsically better for the end user. But that's usually where using deposits is hard or impractical. Where deposits can be used just as easily, it’s not obvious that stablecoins offer an advantage from the end-user’s perspective.

And yet history is full of software products that “won” despite an end-user value proposition that is no better (or even worse) than alternatives.