Stablecoins are cryptographic tokens that are pegged to a relevantly stable underlying asset (e.g., fiat such as the US Dollar, a commodity, a financial instrument, etc.) They may also be pegged algorithmically. The general goal of a stablecoin is to hold a relatively stable value based upon what it is pegged to. This does not always mean a stablecoin is trying to equate to one US dollar or one Euro but rather to the asset value to which it is pegged. Both tokens and cryptocurrencies (such as BTC, ETH, otherwise referred to as payment tokens) are decentralized, and can be used as a store of value and a medium of exchange. However, unlike cryptocurrencies which are the native assets of a blockchainA blockchain is a shared digital ledger, or a continually up... More such as BitcoinThe term "Bitcoin" can either refer to Bitcoin the network, ... More or Ethereum, crypto tokens are created by platforms and applications that are built on top of an existing blockchain and are based on smart contractsA smart contract is a computer protocol intended to digitall... More. In some cases, they may represent an asset, at which point they may be considered a security and thus may be subject to securities law requirements.
Stablecoins are usually issued by privately-owned enterprises and have been introduced to addressIn a cryptocurrency context, an address is a cryptographic k... More the high price volatility of cryptocurrencies (e.g., bitcoin, ether, etc.) Leveraging the underlying blockchain technology, stablecoins can be easily transferred from one digital walletA wallet is a device (a hardware device, a program, or servi... More to another and may be used to facilitate faster and cheaper cross-border fund transfer and remittances. Stablecoins are also used in Decentralized Finance (DeFi)DeFi stands for Decentralized Finance. DeFi purports to remo... More to leverage opportunities in cross-exchange arbitration, lending, and borrowing. As the technology is continuously evolving, stablecoins are proliferating, can take many forms, and can reference a variety of assets.