Stablecoins

In Context

• Stablecoins might be the most ironically named innovation of the cryptocurrency era.

What is Stablecoin?

• Stablecoins are cryptocurrencies without volatility. They share a lot of the same powers as other cryptos, but their value is steady, more like a traditional currency, i.e. the US Dollar, Indian Rupee, etc.
• Stablecoins achieve their price stability via collateralization (backing) or through algorithmic mechanisms of buying and selling the reference asset or its derivatives.
• Stablecoins hold a bundle of assets in reserve, usually short-term securities such as cash, government debt or commercial paper to promise holders that every $1 they put in will remain worth $1.
• Stablecoins are useful because they allow people to transact more seamlessly in cryptocurrencies that function as investments, such as Bitcoin.
•  They form a bridge between old-world money and new-world crypto.

Cryptocurrency

• It is a digital currency that can be used in place of conventional money.
• In cryptocurrencies, cryptography is used to secure and verify transactions. It is also used to control the supply of cryptocurrencies.
• It is supported by a decentralized peer-to-peer network called the blockchain.
• First cryptocurrency: Bitcoin, launched in 2009 by Satoshi Nakamoto.

Source: IE