Stable Coin

What is Stable Coin?

Stable coins are cryptocurrencies that have a predetermined value. The U.S. dollar, a basket of currencies, or exchange-traded commodities like precious metals are frequently used as their benchmarks.

The goal of stable coins is to tie their market value to an external standard, usually a fiat currency. As a medium of exchange, they perform better than more unstable cryptocurrencies. Stable coins can use an algorithm to control output or they can be tied to the price of gold or another commodity, such as the US dollar. They also maintain reserve assets on hand by using algorithmic supply-control techniques or as collateral.

Tether is the most widely used and valuable stable coin in terms of market capitalization (USDT). It is backed by gold reserves and tied at a 1:1 ratio to the US dollar. It frequently ranks among the top five cryptocurrencies in terms of market cap.