Because they sidestep the wild swings of other crypto, stablecoins are used to price trades, settle payments and move value between platforms. Most quoted crypto pairs are denominated in one.
Their reliability depends entirely on how the peg is backed, whether by cash reserves, other crypto, or an algorithm. "Stable" is a design goal, not a guarantee, and pegs have broken before.
Stablecoins and Their Risks
Key takeaways
- A stablecoin aims to hold a steady value, usually one dollar.
- Backing varies: cash reserves, crypto collateral, or an algorithm.
- It can lose its peg if the backing or trust breaks down.
Stablecoin — preguntas frecuentes
How does a stablecoin keep its value?
By holding reserves or using mechanisms to manage supply, though the peg is never fully guaranteed.
Are stablecoins as safe as a bank?
No. They usually lack deposit insurance and carry issuer and reserve risk that bank deposits do not.
This definition is educational and not financial advice. Crypto is volatile and high-risk — always do your own research.
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