What is a stablecoin and why it can change the future
Jul 29, 2025 pm 01:09 PMStablecoins are special cryptocurrencies with value pegged to some stable asset (such as USD or gold) designed to overcome the problem of drastic price fluctuations in mainstream cryptocurrencies such as Bitcoin. It is not only an important bridge between the crypto world and traditional finance, but also because of its stability, it will show huge potential for change in the future fields of global payments, financial services, etc.
Other mainstream Bitcoin exchanges in 2025:
Ouyi okx :
Binance binance:
Huobi htx:
What is a stablecoin
Imagine if the money in your digital account is worth 100 yuan today, it may only be worth 80 yuan tomorrow, and it will rise to 120 yuan the day after tomorrow, would you dare to use it to buy coffee or pay a salary? This is exactly the dilemma faced by mainstream cryptocurrencies such as Bitcoin and Ethereum - prices fluctuate too much and are difficult to become a medium for daily trading. The birth of stablecoins is to solve this problem.
Simply put, a stablecoin is a digital currency with relatively constant value. It achieves price stability by binding to the "stable" in the real world. The most common anchor object is fiat currency, for example, the value of a stablecoin is about 1 USD. This makes it not only have the advantages of cryptocurrencies (such as global circulation, fast transactions, transparent traceability), but also has the stability of traditional currencies, making it an ideal medium of trading and a store of value tool.
The main types of stablecoins
In order to achieve price stability, stablecoins adopt different mechanisms, which can be mainly divided into the following three categories:
Fiat currency collateralized stablecoin
This is the most common and easy to understand. For every stablecoin issued by the issuer, he deposits an equivalent fiat currency (such as USD) in his bank account as reserve. Users can exchange stablecoins 1:1 back to fiat currency at any time. This model has high transparency and strong credibility.
Representative items: USDT (Tether), USDC (USD Coin)
Cryptocurrency mortgage stablecoin
This stablecoin uses other cryptocurrencies such as Ethereum as collateral. Since the price of the collateral itself fluctuates, in order to maintain the stability of the stable coin price, "over-collateralization" is usually required. For example, users need to collateralize $200 worth of Ethereum to generate $100 stablecoins to buffer the risks brought about by falling collateral prices.
Representative Project: DAI
Algorithm stablecoin
This type of stablecoins does not rely on any collateral, but automatically adjusts the money supply in the market through algorithms in smart contracts. When the price of a stablecoin is higher than the anchor price, the algorithm will "issued additional prices" to reduce the price; when the price is lower than the anchor price, the algorithm will "destroy" or "buy back" to increase the price. This model is the most complex and faces higher risks.
Why it can change the future
Stablecoins are not just “non-volatile cryptocurrencies”, they are fundamentally reshaping the way finance and commerce work.
The bridge connecting the traditional finance and the crypto world
For ordinary users and institutional investors, stablecoins are the safest and most convenient entrance to the crypto world. People can participate in the crypto economy through stablecoins and enjoy the convenience it brings without directly bearing the huge risks of assets such as Bitcoin.
Efficient global payments and settlement
Traditional cross-border remittances usually require multiple banks, which takes a long time and is expensive. Payment with stablecoins can be completed almost instantly, and the handling fee is extremely low. Whether it is international trade settlement or cross-border transfers between individuals, the efficiency will be revolutionized.
The cornerstone of Decentralized Finance (DeFi)
In the DeFi ecosystem, almost all lending, trading, financial management and other activities rely on stablecoins. Because it provides a reliable pricing unit and trading medium, complex financial agreements can run smoothly. Without stablecoins, DeFi will be difficult to develop.
Tools to fight inflation
For those countries and regions where their fiat currencies continue to depreciate, converting savings into stablecoins anchored by the US dollar is an effective means to protect personal assets and fight hyperinflation.
Promote inclusive finance
Billions of people around the world still do not have access to basic banking services. Stablecoins use the Internet to allow anyone with a smartphone to access global financial services, whether it is savings, transfers or financial management, thus greatly promoting financial inclusion.
The above is the detailed content of What is a stablecoin and why it can change the future. For more information, please follow other related articles on the PHP Chinese website!

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