The green pieces of paper (actually cotton and linen) commonly known as "dollars" are actually Federal Reserve bills. A "note" is a type of negotiable security that carries a promise that its owner (the holder) will be able to exchange it for what the person who created it (the issuer) has promised.
With the Coin Minting Act of 1792, the dollar was defined as a specific amount of precious metal, originally silver, which in 1890 was changed exclusively to gold.
But in 1933 President Roosevelt issued an executive order requiring American citizens to turn over "all gold coins, gold bars, and gold certificates" to the Federal Reserve and its member banks.
Although the Bretton-Woods agreement of 1944 restored the ability of foreign governments to convert their banknotes into gold, President Nixon stopped that practice in 1971. Thus ended any connection between the dollar and the precious metal.
This evolution of the dollar from a specific quantity of precious metals to a unit of account occurred largely without public debate. The transition means that America's national currency, which was previously based on scarcity (the limited supply of gold and silver), is now based solely on people's willingness to use it as a medium of exchange. This makes the dollar a fiat currency.
Fiat currencies are useful. Among other things, they allow central banks to engage in "quantitative easing" by borrowing (through the issuance of banknotes) something that does not really exist and therefore never has to be repaid (dollars, in the case of the Federal Reserve).
And therein lies the reason why many in Washington (as well as the governments of other countries) do not like cryptocurrencies. The most widely used cryptocurrency, bitcoin, is limited to 21 million tokens. Other digital tokens, like Ether, have mechanisms that provide a set (or at least predictable) rate of inflation. By returning to a scarcity-based monetary system, crypto has the potential to gain user trust at the expense of fiat currency. Stablecoins terrify central bankers for this.
Stablecoin is a cryptocurrency backed by real assets. These assets can be dollars, gold, oil, or anything else. Stablecoins offer holders a currency exchangeable for something that is potentially limited in quantity, effectively restoring the precious metal standard that used to underlie government-issued money.
This restoration of the connection between currency and scarce or tangible assets creates competition for government banknotes that can be printed without limit. Furthermore, cryptocurrency can be used over the Internet without the intermediation of banks, which generally have a monopoly on transactions in government money. This makes it more difficult for authorities to track them down.
Cryptocurrencies and decentralized finance pose a threat to the trust-based monetary system that sustains the modern world.