Digital currencies undoubtedly provide the fastest and cheapest way to transfer wealth over long distances, especially across international borders. However, some caveats steer most people away from using them — with volatility or price fluctuations often quoted as the critical deciding factor. Enter stablecoins.
The term stablecoin refers to a distinct class of cryptocurrencies explicitly designed with price stability in mind. Unlike traditional cryptocurrencies like Bitcoin or Ethereum, stablecoins are linked to an existing asset, like US dollars, euros, or even gold. A USD-backed stablecoin token, for instance, would trade at a constant $1.
