What are Stablecoins?

stablecoins

Stablecoins are an essential part of all the categories of coins and needed their chapter.

Cryptocurrencies are the most volatile assets you can find in the financial markets. Since it is hard to get cryptocurrencies regulated, most exchanges are not allowed to let you trade cryptocurrencies with fiat currencies (USD, EUR, CNY, etc…). Thus, cryptocurrencies pegged to assets with stable values (such as USD) have been created. A stablecoin will then see its value fixed and then stable. The most famous stable currency is the USDT, backed by U.S. Dollars. 1 USDT is the equivalent of 1 Dollar U.S.

Because of Stablecoins, people may now be invested in cryptocurrencies without caring about their overall worth because they still can switch to USDT, thus being assured of having a stable wealth when they are not in any trade.

There is a wide variety of stable coins in the cryptocurrency market. They can be divided into 4 categories :

  • Fiat-backed
  • Commodity-backed
  • Cryptocurrency-backed
  • Seignorage-style

If you wish to learn more about the stablecoins, you can find a full Lesson about them in our Complete Blockchain & Cryptocurrencies Guide.

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