A stablecoin is a stable cryptocurrency backed by fiat currency, cryptocurrencies, or other assets like gold. Its purpose is to anchor the value to fiat currencies such as the US dollar or Euro. ItA stablecoin is a stable cryptocurrency backed by fiat currency, cryptocurrencies, or other assets like gold. Its purpose is to anchor the value to fiat currencies such as the US dollar or Euro. It

Akademi/Cryptocurrency Knowledge/Basic Concepts/What is Stablecoin?

What is Stablecoin?

Jul 16, 2025

Paylaş

#Basic #Basic Concepts

STABLE$0.015334+5.70%

A stablecoin is a stable cryptocurrency backed by fiat currency, cryptocurrencies, or other assets like gold. Its purpose is to anchor the value to fiat currencies such as the US dollar or Euro. It combines the decentralized nature of blockchain with real-world fiat currency prices, thus avoiding drastic price fluctuations. Stablecoins are usually used as a medium of exchange.

The earliest stablecoin was USDT (Tether), introduced by Tether Limited in 2014. It is pegged to the US dollar at a 1:1 ratio. Tether claims that for every USDT issued, a corresponding number of US dollars are held in its official account. This ensures that the USDT tokens issued have an equivalent amount of USD as collateral, maintaining a 1:1 exchange ratio between USDT and USD. Moreover, users can verify funds on the Tether platform, ensuring transparency. In theory, this provides users with a high level of security and usability in terms of asset experience.

Additionally, stablecoins like USDC and DAI, which are popular among users, also peg their value to the US dollar and maintain a 1:1 exchange ratio.

1.Classification and Pros and Cons of Stablecoins

Stablecoins are typically categorized into three types: fiat-collateralized stablecoins, cryptocurrency-collateralized stablecoins, and algorithmic stablecoins.

Fiat-collateralized stablecoins are the most popular stablecoins in the market. They are directly pegged to fiat currency at a 1:1 ratio, such as the aforementioned USDT and USDC. The drawbacks of this type of stablecoin include centralization, lack of transparency, and the absence of reserve funds and guaranteed token redemption. Questions regarding whether the USD reserves are sufficient, whether issuing empty tokens could create market bubbles, the security of USD reserves, and the risk of misappropriation of collateral continue to raise concerns.

Cryptocurrency-collateralized stablecoins are similar to fiat-collateralized stablecoins but differ in using cryptocurrencies as collateral, as seen with DAI. The collateral itself is a decentralized cryptocurrency, which addresses credibility issues. This method enables users to create stablecoins by locking up collateral exceeding the total stablecoin amount. However, the challenge lies in the collateral itself, which is a digital asset prone to significant price fluctuations and lacks resilience against unforeseen events.

Algorithmic stablecoins, also known as non-collateralized stablecoins, do not require collateral or any other valuable assets for backing. Their value pegging is entirely achieved through algorithms and smart contracts. Smart contracts manage the supply of issued tokens, and stable prices are maintained through the deflationary/expansionary nature of the token supply, as seen in CrvUSD, FEI, and more. The downside of these stablecoins is that stability is usually maintained by centralized mechanisms, and monetary policies remain complex, unclear, unproven, with potentially inadequate incentive measures. Most projects of this type experience high volatility, and extreme situations can lead to price declines or even collapses, as seen in May 2022 when Luna's algorithmic stablecoin, UST, collapsed.

2.Why Do We Need Stablecoins?

The emergence of stablecoins is grounded in practical necessity. In contrast to fiat currencies, the cryptocurrency market is often volatile—token values often fluctuate significantly from their initial values—making it difficult for investors to store their digital assets. Stablecoins address this issue by being closely tied to underlying assets or fiat currencies, ensuring a stable valuation. Therefore, they can be considered trustworthy safe-haven assets in turbulent markets, as stablecoins can maintain their stability through various mechanisms.

3.Should You Invest in Stablecoins?

Stablecoins offer us a stable digital channel to maintain the stability of our profits. They provide liquidity and serve as a more stable form of decentralized cryptocurrency. However, stablecoins are primarily a means of exchange and collateral, lacking inherent investment qualities.

4.Conclusion

In conclusion, despite their limitations, stablecoins remain an essential part of the cryptocurrency market. Stablecoins are cryptocurrencies backed by assets with valuation, and under various regulatory mechanisms, they can maintain stability within predefined ranges. Therefore, stablecoins not only serve as transactional mediums but also become a "safe haven" for traders and investors, seen as a highly secure locus of long-term investment. If you want to acquire stablecoins, you purchase them quickly and easily on MEXC.

Piyasa Fırsatı

STABLE Fiyatı(STABLE)

$0.015334

$0.015334$0.015334

+0.32%

USD

STABLE (STABLE) Canlı Fiyat Grafiği

Popüler Makaleler

MSFT Earnings Date Q2 2026: What to Expect and How to Trade It

As January progresses, the search volume for "MSFT earnings date" is spiking. Investors and traders globally are preparing for one of the most significant market-moving events of the tech sector: Micr

2026/01/14

Does XRP Have a Future? What Every Investor Should Know

If you're asking "does XRP have a future," you're not alone. Thousands of investors search for this answer every month, trying to understand whether this crypto is worth their money. XRP sits at a cro

2026/01/14

How to Mine XRP? The Truth About XRP Mining

If you're searching for how to mine XRP, you've probably heard conflicting information about XRP mining. The truth might surprise you. This guide explains everything you need to know about how to mine

2026/01/14

Who Owns XRP? Complete Ownership Guide

If you're wondering who owns XRP, you're asking one of the most important questions about this cryptocurrency. Understanding XRP ownership reveals how power and control are distributed across this dig

2026/01/14

Popüler Haberler

Daha Fazla Göster

Gate Launchpad Phase 6 Immunefi (IMU) will launch, supporting USD1 and GUSD subscriptions with 100% unlock and distribution.

PANews reported on January 14th that, according to an official announcement, the sixth phase of Gate Launchpad, the Immunefi (IMU) project, will begin its subscription

2026/01/14

Solana ETFs Market Update: FSOL Dominates with $5.91M Inflows as Other SOL ETFs Hold Stable

TLDR FSOL ETF recorded $5.91M in daily inflows and contributed 41.13K Solana tokens on January 13. FSOL’s cumulative net inflow reached $139M, with net assets valued

2026/01/14

Fidelity's 2026 Outlook: Gold Leads in 2025, Bitcoin Takes the Lead in 2026

Author: Fidelity Digital Assets Research Compiled by: Bilibili News In 2026, the digital asset market is at a crossroads of maturity and transformation. This report

2026/01/14

Bank of America (BAC) Q4 2025 earnings

The post Bank of America (BAC) Q4 2025 earnings appeared on BitcoinEthereumNews.com. Brian Moynihan, Chairman and CEO of Bank of America, speaks with Economic Club

2026/01/14

İlgili Makaleler

What Is Liquidation? A Complete Guide to Its Mechanism, Price Calculation, and Risk Management

1. What Is Liquidation (Margin Call)? When Does It Most Often Occur? Forced liquidation happens when an account's maintenance margin rate falls below the platform's requirement, prompting the trading

2026/01/14

MEXC Account Problems Solved: Login Issues, KYC, Withdrawal & Support Guide

1. Login1.1Howdo Iloginwhenneither mymobilenumbernoremail are accessible?If you remember your account login password:On the Web:On theofficial login page, enter your account and password, then click t

2026/01/12

Dogecoin vs Bitcoin: Key Differences in Volatility, Supply, and Trading Dynamics

Dogecoin (DOGE)andBitcoin (BTC)are two of the most recognized digital assets, yet they often behave differently in real markets. Bitcoin is commonly discussed through scarcity and market-structure nar

2026/01/08

Common Dogecoin Trading Mistakes Beginners Make and How to Avoid Them

Dogecoin (DOGE)is one of the most famous digital assets in crypto. Its meme identity, familiar branding, and constant online conversation can make DOGE feel "easy" to understand—sometimes easier than

2026/01/08

Hemen Hesap Açın ve 10.000 USDT'ye Kadar Bonus Kazanın