A cryptocurrency that pegs it value to something else.
This can come in a few different forms:
Stablecoins can be backed by holdings of other assets called a reserve. The most popular is to peg the stablecoin to the USD by having cash and/or cash equivalents in reserve.
We also see algorithmic stablecoins which are created by conversion another digital asset.
Whichever format is chosen, the goal is to reduce volatility thus offering a stable medium of exchange. For many, this is the essence of a payment system.
Stability is required for both collateralization along with commercial transactions.
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