Stablecoin

A stablecoin is a type of cryptocurrency designed to hold a steady value by tracking a reference asset, most often a national currency such as the US dollar. Issuers attempt to maintain this stability through mechanisms like holding cash and short-term reserves, over-collateralising with other crypto assets, or using algorithms that adjust supply. Stablecoins are commonly used to move value between trading venues without converting back to bank money.

A common misconception is that all stablecoins are equally safe; their reliability depends on the quality of reserves, redemption rights, and the transparency of the issuer, which vary widely.