Stablecoin

Stablecoin is a currency with supposed value stability.

How does the stability of a stablecoin work?

- There is no total guarantee that the stablecoin will be reliable and will not lose its value, however, it is based on a guarantee mechanism, a ballast, which may be a physical ballast that is in gold or state currency called fiat currency (US dollar, for example), a purely mechanism backing between other currencies or the simple institutional trust of a strong organization behind the currency, such as a government or large company.

In practice, it is a currency that is used for exchanges in times of market instability, to exit currencies that can lose value quickly, reducing risk or at times when the investor wants to keep the value without fluctuating too much to use later.

Watch out! The backing of the stable currency could be a lie by the organization or be in a fragile stabilization mechanism, which could lose all its value, as has already happened in some cases.

Most famous stablecoin cryptocurrencies are: Tether (USDT), USD Coin (USDC) and Binance USD (BUSD).