Issuers of stablecoins normally maintain a reserve stock of the currency - but what does that actually mean?

The most common pegs are fiat currencies such as the US dollar, the Euro or GBP Sterling, but other assets, such as commodities like gold or oil, can be used. This is done so that even in the face of market volatility, the value of the stablecoin remains relatively stable.

Increased speed, optimised price, and greater autonomy are among the significant benefits offered to those who choose to use stablecoins within business practices.

From everyday purchases and engaging in entertainment, to entire countries retaining more of their wealth, stablecoin usage for retail consumers can provide a wide range of value propositions for the modern consumer.

Algorithmic stablecoins are the most recent creation in the area of stablecoins. This type of stablecoin is reliant upon an algorithm that pegs itself to a physical currency.

As their name suggests, commodity backed stable coins are collateralized with real world assets such as precious metals, real estate and oil.

Crypto backed stablecoins are a variety of stablecoins which collateralize crypto assets using an electronic vault system. Most commonly ‘Ethereum’ is the collateral used. ...

Fiat backed stablecoins are digital assets that maintain financial reserves in fiat currency held by regulated institutions such as banks. ...

Stablecoins are set to have an ever greater presence in modern society. As a result, it’s important to have an understanding of the ...