What is a Stablecoin?

The biggest problem with making cryptocurrencies like Bitcoin usable as payment methods is that their price fluctuates heavily.

Imagine you feel like eating a steak, and there is just enough Bitcoin in your wallet to buy one, but you fall asleep on the couch. The day after, you walk into the restaurant and all you can get for your bitcoin is a cup of soup. Bitcoins value has fallen and so has your purchasing power.

That’s why stable crypto coins were invented. They are meant to be stable relative to a real-world currency. USDC is a great example: 1 USDC tries to always be very, very close to 1 actual dollar. That means your steak would always have a stable price.

Stable coins actually exist for many currencies and are actively used as payment methods. Another example, Celo Real, allows merchants in Brazil to accept payments from anyone in a coin that mimics their own currency, without either party having to have a bank account.

But beware! Often, stablecoins are not as stable as the name implies. Take our class to find out more!

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