What Are Stablecoins?

Stablecoins are digital currencies with a stable price. Their value is tied to other assets that are more or less stable. Usually, these are traditional currencies, commodities like gold, or even other cryptocurrencies.

Cryptocurrencies with a stable value are highly popular on crypto exchanges. Typically they act as a substitute for fiat currencies like the dollar or euro.

Traders cant trade cryptos to fiat currencies directly on crypto exchanges. Instead, they trade cryptocurrencies to stablecoins that are resistant to volatility. Stablecoins help traders stay on the exchanges and not exit crypto markets in times of high volatility.

Some of the best-known stablecoins are Tether (USDT), USD Coin (USDC), and Paxos Standard (PAX). All of them, however, are built on existing blockchains and, theoretically, are tokens.