What is a stablecoin?
A crypto token designed to hold a steady value, usually one US dollar, so it can be used for payment and trading without price swings.
Most large stablecoins are backed by reserves of cash and short-term government debt held by an issuer who promises redemption at par. Others are backed by crypto collateral held in smart contracts and over-collateralised to absorb volatility.
Why it matters: stablecoins are what most people actually transact in, and they are the main bridge between crypto and the banking system. The risk is not price volatility but the backing: a peg holds only as long as the reserves are real, liquid and redeemable, or the collateral mechanism survives stress. Algorithmic designs without real backing have failed catastrophically.
Related terms
- Proof of stakeA consensus mechanism where validators lock up the network's own token as collateral and…
- HalvingThe scheduled event where the reward paid to Bitcoin miners for producing a block…
- Proof of workA consensus mechanism where computers compete to solve a hard arithmetic puzzle, and the…
- Smart contractA program stored on a blockchain that runs exactly as written when its conditions…
- Self-custodyHolding your own crypto directly, controlling the private keys yourself, rather than leaving it…
- GasThe fee paid to have a transaction processed on Ethereum and similar networks, priced…
Crypto assets are volatile and high-risk. Prices shown are indicative and may be delayed. Always do your own research. Coinpric does not provide financial advice.