GlossaryIntermediate
Stablecoin
A cryptocurrency designed to maintain a stable value, often by tracking a currency like the US dollar.
A stablecoin is a type of cryptocurrency designed to hold a relatively stable value, most commonly by tracking a fiat currency such as the US dollar. This is intended to reduce the price swings seen in many other cryptocurrencies.
Different stablecoins use different methods to maintain their target value, such as holding reserves of traditional assets or using other mechanisms defined by their issuer. The reliability of any given stablecoin depends on its specific design and issuer.
Examples
- A stablecoin tracking the US dollar aims to stay close to a value of one dollar per unit.
- Traders sometimes use stablecoins to hold value between other cryptocurrency positions without converting back to traditional currency.