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Key Takeaways

  • Stablecoins are cryptocurrencies pegged to fiat currencies, like the US dollar.
  • Tether (USDT) was the first stablecoin.
  • Using stablecoins involves trust in the issuer to hold the backing assets.

What Are Stablecoins?

Stablecoins are cryptocurrencies that are backed by government currencies, like the US dollar or euro.

As cryptocurrency began to grow, there was a demand for coins that were pegged to real-world assets like the US dollar.

Table Of Contents

History of Stablecoins

Tether (USDT) was the first stable coin to launch in 2015.

Tether has been growing since it launched in 2015.

Tether created a coin called Tether, and each unit of Tether was backed and equal to $1 US dollar.

Today, there are other large stable coins pegged to the US dollar, namely USDC, which is run by Circle.

BUSD, is another large stablecoin, which is operated by Binance.

There are other stable coins backing other assets, but none of them are similar in size to the top three USD stable coins: USDT, USDC and BUSD.

List of the largest stablecoins according to size.

Pros of Stablecoins

The pros of stable coins are:

  • People can quickly transfer government currencies without the need for banks or middleman.
  • The only trust you need to have with stable coins are that the company is actually backing the coin with the claimed assets.

Cons of Stablecoins

The main issue with stable coins is that you need to trust the issuer that they actually hold the assets backing the stablecoin.

For example, it’s technically possible that the company running USDT doesn’t own any dollars.

However, the markets are quick to react with news.

When there are scares about stable coin issuers owning backing assets, the peg of the coin usually comes undone.

The risks of stable coins are larger when using them for long term storage. If you’re just transferring or sending money quickly, the risks are fairly low since the peg would need to come undone exactly at the time of transfer.

Article Sources

BuyBitcoinWorldWide writers are subject-matter experts and base their articles on firsthand information, like interviews with experts, white papers or original studies and experience. We also use trusted research and studies from other well-known sources. You can learn more about our editorial guidelines.

  1. Stability amid the volatility of crypto: Stablecoins explained - Britannica Money,
  2. Stablecoin - Wikipedia,
  3. The stable in stablecoins - The Federal Reserve,

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