What are Stablecoins?

What are Stablecoins and how did they come about?

The financial world was completely disrupted by the advent of cryptocurrencies, as well as their first manifestation in 2009 — Bitcoin, by the mysterious Satoshi Nakamoto. Since then many different forms of cryptocurrencies came into existence. One general drawback or benefit (depending on how you think about it) is that the majority of cryptocurrencies have a history of having highly volatile prices. This means that the market price of cryptocurrencies fluctuates greatly and that it is near impossible to predict trends in the market. Although these big price fluctuations can work in favour of cryptocurrency traders, the lack of stability makes it very difficult for businesses to consider it an effective or safe payment option. For this specific reason, a new form of cryptocurrency was invented, known as “the stablecoin.”

Stablecoins remove volatility from the market by pegging the price of a stablecoin to another stable asset. This can be a real-world currency or a rare metal. Although the exact mechanics behind each stablecoin can be very complex, the general idea is really simple; a cryptocurrency coin meant to hold a stable value. Stablecoins can essentially be seen as dollar substitutes which allows one to get out of a cryptocurrency like Bitcoin on an exchange that doesn’t deal in US dollars. This enables you to get into…