Glossary > Stablecoin
Stablecoin is a cryptocurrency whose value is more stable than conventional cryptocurrencies. In another word, they are cryptocurrencies whose value is pegged or tied to another currency commodities or financial instruments. Usually, stablecoin is backed by other assets such as fiat money, gold, oil, etc.
Stablecoins aim to be an alternative to the high volatility of cryptocurrencies, include Bitcoin (BTC) that, makes crypto investments unsuitable for general transactions.
The bitcoin system has coins that are classified as stablecoins.
It could be backed with fiat or a traded commodity (such as metals for example) because stablecoins price is steadier unlike other cryptocurrencies such as Bitcoin.
Stablecoins attempt to peg market capitalization to external references, usually fiat currency. They are more practical than cryptocurrencies which are more volatile as a medium of exchange
For example, The USDC currency is backed by the US dollar. Therefore, the value of USDC depends on the volatility and distribution of that currency. This depends on many factors such as politics, economy, supply-demand and many others.
The first stablecoin by market capitalization is Tether (USDT). Other well-known stablecoins are USD Coin (USDC), Binance USD (BUSD) and etc.
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