Definition of Stablecoins

Financial Terms Beginning with S

What are Stablecoins

A stablecoin is a digital currency, issued by a company, that is pegged to a stable reserve asset, such as the US dollar or gold. A stablecoin is designed to reduce the volatility relative to other cryptocurrencies that are unpegged.

Why are Stablecoins Important

Stablecoins are free from the volatility of non-pegged cryptocurrencies, while inheriting some of their most powerful properties.

  • Stablecoins are open, global and accessible to anyone on the Internet, 24/7
  • Stablecoins are fast, cheap and secure to transmit
  • Stablecoins are digitally native to the Internet and programmable

What Can You Do With Stablecoins

  • Minimize Volatility – An asset that is pegged to a more stable currency can give buyers and sellers better certainty that the value of their tokens won’t rise or fall unpredictably in the near future.
  • Trade or Save Assets – You do not need a bank account to hold stablecoins. Their value can be sent easily around the world, including places where the US dollar may be hard to obtain or where the local currency is unstable.
  • Earn Interest – Some stablecoins earn interest at higher rates than a typical bank account.
  • Transfer Money Cheaply – Transfer fees are relatively inexpensive to other money transfer options.
  • Send Internationally – Fast processing and low transaction fees make stablecoins a good choice for sending money globally.

Glossary of Terms and Phrases

A financial dictionary or glossary is an essential tool to better understand the meaning of a specialized term or phrase. It would obviously make life much easier if everyone spoke the same language and used the same financial terms and phrases but that is not realistic.

We learn new languages to communicate with each other, transact business globally and to appreciate other cultures. Global finance is a specialized language that if understood and mastered, it will provide benefits that help to decrease risk and improve investment returns. Financial literacy is the foundation of developing good investment strategies and sound decision making.

Related Investment Terms

Bitcoin

Cryptocurrency

Fiat Currency

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