What are Stablecoins? – CoinsCapture – Medium
- A stablecoin is a type of cryptocurrency that isn’t volatile and is backed or pegged by assets like the fiat currency, the United States dollar, or precious metals (gold).
- A stablecoin is always pegged by an asset of stable value so that even if the general cryptocurrency market capitalization increases or decreases in a single day stablecoins has a fixed valuation in relation to its underlying asset.
- The coins that are fully backed by fiat money are termed as Fiat-backed stablecoin.
- This type is almost centralized as there will be a company or a central entity in between for managing the acceptance of new fiat and issuing of fiat-backed tokens of the corresponding amount.
- This type of pegging is almost centralized as there will be third-parties involved in managing the system Cryptocurrency-pegged stablecoin: The coins that are backed by top-ranked cryptocurrencies with large market capitalization such as Bitcoin ( BTC ) or Ether ( ETH ) are called as cryptocurrency-pegged stablecoins.
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