Definition: stablecoin

A cryptocurrency whereby each coin is backed by something of value. Stablecoins are a digital currency that has the worldwide transfer attributes of Bitcoin without the price fluctuation. For example, one token of an asset-backed stablecoin such as Digix (DGX) or OneGram (OGC) equals one gram of gold. Fiat-backed stablecoins such as USDT and USDC are pegged to the U.S. dollar. However, stablecoins can be backed by a fluctuating asset, which can be problematic. In fact, BitUSD, the first stablecoin, failed within a few years due to inadequate backing (see BitUSD).

Because stablecoins are crypto, they can be transferred to any crypto wallet or exchange, and popular stablecoins are widely supported. Investors, traders and arbitrageurs use them for temporary cash (see crypto trading pair).

In September 2025, the following stablecoins had market caps of one billion dollars and greater (see Tether, USDC and USD1).

                 Market Cap
             (rounded up/down
            to nearest billion)   Price

     USDT (Tether)   $173        $1.0

     USDC            $ 72        $0.9999

     USDS            $  8        $1.0

     Dai             $  5        $1.0

     USD1            $  2        $1.002

     PayPal USD      $  1        $0.9988

Stablecoins Are Having Their Heyday
Since the Trump administration's stance became pro-crypto, banks and other companies in America are figuring out if they should issue stablecoins and collect fees. In 2025, along with partners, the Trump family launched their own stablecoin company, and its USD1 token (above) briefly became the fastest growing stablecoin on the market. See GENIUS Act and World Liberty Financial.

Stablecoins Have Value Beyond Crypto
Because stablecoins provide a global money exchange with lower fees than typical bank transfers, there is a lot of incentive worldwide. They also provide execution in minutes or even seconds compared with one to five business days for traditional international transfers.

The Privacy Advantage
Keeping financial transactions private is another advantage. Stablecoins offer a private banking alternative, and naturally, thieves welcome this option.

Approaches to Stablecoin Stability
A "reserved" or "regular" stablecoin is backed by dollars, Euros or precious metals. Stablecoin issuers can also invest in commercial paper, secured loans and even fluctuating assets such as other crypto tokens, the latter known as "algorithmic stablecoins." If the stablecoin/token ratio goes out of balance, tokens are added or destroyed ("burned") to maintain equilibrium. However, if the stablecoin is matched with a failing token, things can fall apart (see TerraUSD). See DAI, Tether, Gemini Trust, USDC, Diem and crypto burning.

A New Way to Profit
Stablecoins offer a new financial product for any private company. Not only do they collect fees for creating new stablecoins (minting the digital coins) as well as making transfers, they invest the cash they receive for coin purchases and collect interest forever.

It is a complicated and expensive process to set up the necessary systems by programming smart contracts on a blockchain. However, once established, stablecoins are a lucrative business. The more marketing a company does and the more influence it has, the more money keeps flowing in. See smart contract and blockchain.