What is Stablecoin?
Let's find out Stablecoin meaning, definition in crypto, what is Stablecoin, and all other detailed facts.
Stablecoin is a fixed value cryptocurrency that is pegged to a leading fiat currency, such as the U.S. dollar, or to an exchange-traded commodity, such as gold. Since these coins are actually stable, they are a great tool to lower the price volatility of the whole cryptocurrency market.
To provide the same price stability as fiat currencies, stablecoin currencies are backed by an underlying asset, usually the one it digitally reflects. For example, Tether (USDT) stablecoin is backed on a 1:1 basis by the U.S. dollar meaning that 1 USDT equals $1.
The amount of available stablecoins and their value has increased dramatically in recent years. Besides, there is a variety of crypto assets that are pegged to other fiat currencies, such as euros, pounds, etc. There are four main types of stablecoins:
- Non-collateralized stablecoins that use algorithm mechanism and the Seigniorage Shares system to preserve their peg.
- Commodity-collateralized stablecoins, like Tether Gold (XAUT).
- Crypto-collateralized stablecoins, like MakerDAO's Dai token.
- Fiat-collateralized stablecoins, like USDC, USDT, BUSD, etc.
With stablecoins, the possibilities seem to be unlimited. Some projects, such as Diem (previously known as Libra), even tried to allow stablecoins to be used as a type of exchange medium that is backed by a basket of national currencies.
While new stablecoin-focused legislations are always believed to be on the way, authorities around the world continue to tolerate them due to their high compliance with financial regulatory criteria. Stablecoins have certainly served as a model for central bank digital currencies (CBDC), both in terms of inspiration and strategy.
Stablecoins are extremely simple to acquire and can be found on nearly any cryptocurrency market. In a nutshell, they provide much-needed liquidity and a safe haven for crypto investors. Besides, they are an important part of the whole ecosystem of digital assets.
Depending on the type of spyware, victims may accidentally be infected by different methods, such as <strong>malicious ads<\/strong>, suspicious emails, and <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-phishing/">phishing websites<\/strong><\/a>. Untrustworthy files may also contain spyware or other viruses that can corrupt or compromise the computer system.<\/p>\n<p>Malicious parties use spyware to target users on various crypto networks to acquire their <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-private-key-secret-key/">private keys<\/strong><\/a> and gain access to digital assets. Crypto transactions cannot be reversed, making <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-cryptocurrency/">cryptocurrencies/strong>/strong>/a> a favorable target for hackers.<\/p>","definition":"malware used to spy on infected electronic devices.","status":"published","updated_at":"2024-04-02T14:16:56.000000Z"}" :model="{"id":708,"wikipedia_url":"https:\/\/en.wikipedia.org\/wiki\/Stablecoin","level":"easy","section":"S","keyword_en":"Stablecoin","author_id":1,"created_at":"2023-06-19T06:59:00.000000Z","slug":"what-is-stablecoin","title":"What is Stablecoin?","keyword":"Stablecoin","content":"<p>Stablecoin is a fixed value cryptocurrency that is pegged to a leading <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-fiat/">fiat currency<\/strong><\/a>, such as the U.S. dollar, or to an <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-digital-commodity/">exchange-traded commodity<\/strong><\/a>, such as gold. Since these coins are actually stable, they are a great tool to lower the price volatility of the whole cryptocurrency market. <\/p>\n<p>To provide the same price stability as fiat currencies, <strong>stablecoin currencies are backed by an underlying asset<\/strong>, usually the one it digitally reflects. For example, Tether (USDT) stablecoin is backed on a 1:1 basis by the U.S. dollar meaning that 1 USDT equals $1.<\/p>\n<p>The amount of available stablecoins and their value has increased dramatically in recent years. Besides, there is a variety of crypto assets that are pegged to other fiat currencies, such as euros, pounds, etc. There are four main types of stablecoins:<\/p>\n<ul>\n<li><strong>Non-collateralized stablecoins<\/strong> that use algorithm mechanism and the <a href=https://www.bitdegree.org/"https:////en.wikipedia.org//wiki//Seigniorage/" target=\"_blank\" rel=\"nofollow noindex noopener\"><strong>Seigniorage<\/strong> <strong>Shares system<\/strong><\/a> to preserve their peg.<\/li>\n<li><strong>Commodity-collateralized stablecoins<\/strong>, like Tether Gold (XAUT).<\/li>\n<li><strong>Crypto-collateralized<\/strong> <strong>stablecoins<\/strong>, like MakerDAO's Dai token.<\/li>\n<li><strong>Fiat-collateralized stablecoins<\/strong>, like USDC, USDT, BUSD, etc.<\/li>\n<\/ul>\n<p>With stablecoins, the possibilities seem to be unlimited. Some projects, such as Diem (previously known as Libra), even tried to allow stablecoins to be used as a type of <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-medium-of-exchange/">exchange medium<\/strong><\/a> that is backed by a basket of national currencies. <\/p>\n<p>While new stablecoin-focused legislations are always believed to be on the way, authorities around the world continue to tolerate them due to their high compliance with financial regulatory criteria. Stablecoins have certainly served as a model for <a href=https://www.bitdegree.org/"//crypto//learn//crypto-terms//what-is-central-bank-digital-currency/">central bank digital currencies (CBDC)<\/strong><\/a>, both in terms of inspiration and strategy.<\/p>\n<p>Stablecoins are extremely simple to acquire and can be found on nearly any cryptocurrency market. <strong>In a nutshell, they provide much-needed<\/strong> <strong>liquidity and a safe haven for crypto investors.<\/strong> Besides, they are an important part of the whole ecosystem of digital assets.<\/p>","definition":"a fixed value cryptocurrency that is generally pegged to a fiat currency or an exchange-traded commodity.","status":"published","updated_at":"2024-04-02T14:16:56.000000Z","author":{"id":1,"user_id":1,"image_id":2641,"created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2024-02-29T07:19:25.000000Z","title":"Editor-In-Chief","slug":"aaron-s-editor-in-chief","description":"<p>Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.<\/p>\n<p>With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.<\/p>\n<p>Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.<\/p>\n<p>Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.<\/p>","user":{"id":1,"first_name":"Aaron","last_name":"S.","email":"aaron@bitdegree.org","email_sanitized":"aaron@bitdegree.org","email_verified_at":"2023-12-01T09:40:20.000000Z","must_verify_email":false,"is_registered_with_wallet":false,"status":"active","country":"LT","last_connected_ip":"88.119.132.125","referral_token":"05TMu2NysXOCn525","referred_by":null,"last_connected_at":"2024-04-09T08:14:54.000000Z","created_at":"2023-05-03T14:30:55.000000Z","updated_at":"2024-04-09T08:14:54.000000Z","full_name":"Aaron S."}}}" :chapter-list="[{"id":1,"is_updated":null,"image_url":"crypto\/assets\/crypto-book\/chapters\/learn-blockchain.jpg","image_url_simple":"crypto\/assets\/crypto-book\/chapters-simple\/blockchain-101.jpg","rating":100,"created_at":"2024-03-29T15:17:14.000000Z","updated_at":"2024-03-29T15:17:14.000000Z","title":"Blockchain","crypto_book_sections":[{"chapter_id":1,"order":1,"slug":"what-is-blockchain","title":"What is the Blockchain?","status":"published"},{"chapter_id":1,"order":2,"slug":"decentralized-blockchain","title":"Anonymous & Decentralized Blockchains: The Cornerstone of Crypto","status":"published"},{"chapter_id":1,"order":3,"slug":"blockchain-transaction","title":"What is a Blockchain Transaction in Crypto?","status":"published"},{"chapter_id":1,"order":4,"slug":"crypto-fees","title":"The Different Types of Crypto Fees Explained","status":"published"},{"chapter_id":1,"order":5,"slug":"what-is-bridging-in-crypto","title":"The Key Notion Behind the Concept of Bridging in Crypto","status":"published"},{"chapter_id":1,"order":6,"slug":"types-of-blockchains","title":"Different Types of Blockchains: What to Look Out For?","status":"published"}]},{"id":2,"is_updated":null,"image_url":"crypto\/assets\/crypto-book\/chapters\/learn-cryptocurrencies.jpg","image_url_simple":"crypto\/assets\/crypto-book\/chapters-simple\/cryptocurrencies-101.jpg","rating":100,"created_at":"2024-03-29T15:17:14.000000Z","updated_at":"2024-03-29T15:17:14.000000Z","title":"Cryptocurrencies","crypto_book_sections":[{"chapter_id":2,"order":1,"slug":"what-is-a-cryptocurrency","title":"What is a Cryptocurrency?","status":"published"},{"chapter_id":2,"order":2,"slug":"how-does-cryptocurrency-work","title":"How Does Cryptocurrency Work?","status":"published"},{"chapter_id":2,"order":3,"slug":"is-cryptocurrency-a-good-investment","title":"Is Cryptocurrency a Good Investment? 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