What Is a Stablecoin?
Crypto's dollar rails — how stablecoins hold their value and where the risks lie.
A stablecoin is a cryptocurrency designed to hold a steady value, usually pegged to one US dollar. They let you move value and trade quickly without the volatility of other crypto.
How the peg holds
Fiat-backed stablecoins like USDT and USDC are backed by reserves of cash and short-term government debt. Arbitrage keeps the price near a dollar as traders mint and redeem to profit from small deviations.
The risks
A peg can break if confidence in the reserves falters or redemption is restricted. The key questions for any stablecoin are simple: what backs it, who audits it, and can you redeem it 1:1 on demand?
Educational content only — not financial advice. Always do your own research before investing in crypto.
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