What is a Stablecoin? Most Comprehensive Video Guide

“Stable coin” is a term used in cryptocurrency to describe cryptocurrencies meant to hold stable values. For example, Tether (USDT) is a blockchain based asset meant to trade for $1 USD. Tether is a “price-stable cryptocurrency” that is “pegged” to the U.S. dollar.

There are a number of stable coins in circulation today, and a number more have been attempted in the past (with varying degrees of success).

Each stable coin has a unique set of mechanisms, but they all generally work the same way: They hold collateral of some type and manage the supply to help incentivize the market to trade the coin for no more or less than $1. For some, like Tether or TrueUSD, the concept is to hold actual dollars in reserve that are redeemable for the token. For others, like Dai, they hold crypto assets in reserve and have a lending system.sing value due to price volatility—one of the reasons why cryptocurrencies haven’t been widely adopted yet. The likes of bitcoin, Ethereum and Litecoin have been used severally for transactions involving online payments. They have, however, not been reliable for making day-to-day transfers due to high volatility in price.