Stablecoin
A cryptocurrency designed to hold a steady value, usually pegged to a currency like the dollar or euro.
A stablecoin aims to combine the speed and programmability of crypto with the price stability of traditional money by tracking a reference asset, most often a major currency. Reserves or algorithms are used to keep the peg, so one unit stays close to one dollar or euro. Stablecoins are widely used for trading, payments, and parking funds between crypto positions without converting back to a bank. Their stability depends entirely on the quality and transparency of whatever backs them, which has failed before. They are a tool, not a guaranteed safe haven.
Example
A trader sells a volatile coin into a dollar-pegged stablecoin to lock in value, holding roughly $1 per unit without leaving the crypto ecosystem.
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Related terms
Cryptocurrency
A digital asset secured by cryptography and recorded on a blockchain, operating without a central authority.
Blockchain
A distributed, tamper-resistant digital ledger that records transactions across many computers.
Volatility
The degree to which an asset's price fluctuates over time; higher volatility means larger, less predictable swings.
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