Stablecoin

A stablecoin is a type of cryptocurrency where the value of the digital asset is supposed to be pegged to a reference asset, which is either fiat money, exchange-traded commodities (such as precious metals or industrial metals), or another cryptocurrency.^[1]

In theory, 1:1 backing by a reference asset could make a stablecoin value track the value of the peg and not be subject to the radical changes in value common in the market for many digital assets.^[2] In practice, however, stablecoin issuers have yet to be proven to maintain adequate reserves to support a stable value^{[neutrality is disputed]} and there have been a number of failures with investors losing the entirety of the (fiat currency) value of their holdings.

^ "Rise of Crypto Market's Quiet Giants Has Big Market Implications". Bloomberg.com. 19 March 2021. Archived from the original on 26 November 2021. Retrieved 18 April 2021.
^ Cite error: The named reference bb20181029 was invoked but never defined (see the help page).

[bb20210319-1] "Rise of Crypto Market's Quiet Giants Has Big Market Implications". Bloomberg.com. 19 March 2021. Archived from the original on 26 November 2021. Retrieved 18 April 2021.

[bb20181029-2] Cite error: The named reference bb20181029 was invoked but never defined (see the help page).

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