Ever wondered how to use crypto without the wild price swings? Meet stablecoins – the steady players in the volatile crypto world.
Bitcoin can jump 10% in a day, Ethereum can crash 20% overnight. This makes them tough to use for everyday transactions. Would you buy coffee with money that might lose half its value by lunch?
That’s where stablecoins come in. These are cryptocurrencies designed to maintain a steady value – usually pegged to the US dollar. One USDC or USDT typically equals one dollar.
Stablecoins stay stable through different methods:
Collateralized stablecoins like USDC and USDT are backed by real dollars in bank accounts.
Algorithmic ones like TerraUSD tried using smart contracts to control supply, but collapsed in 2022.
Crypto-backed stablecoins like DAI are secured by Ethereum and other cryptocurrencies as collateral.
This stability makes them perfect for sending money across borders, trading crypto without cashing out, or storing value without traditional banking.
