What Are Stablecoins?

Adekunle Joshua

Stablecoins are cryptocurrencies whose value is pegged to another currency, commodity, or financial instrument

They are designed to maintain a stable value, making them helpful as an option in times of volatility

Stablecoins let you transact and transfer for low-costs and at high speeds

There are 4 types of Stablecoins based on the mechanism used to stabilize their value

Fiat-Collateralized Stablecoins: Backed by 1:1 ratio of the Fiat currency to the stablecoin

Commodity Backed Stablecoins : Backed by commodities such as gold, real estate and diamonds

Cryptocurrency Backed Stablecoins: Backed by either one or a combination of crypto currencies

Non-collateralized: This type of stablecoin uses algorithms to keep their value steady