#StablecoinPayments

A stablecoin is a type of cryptocurrency designed to maintain a stable value by pegging it to a reserve asset, such as fiat currency (e.g., USD, EUR), commodities (e.g., gold), or other cryptocurrencies. Unlike volatile cryptocurrencies like Bitcoin, stablecoins aim to minimize price fluctuations, making them ideal for transactions, remittances, and decentralized finance (DeFi) applications.

There are three main types:

1. **Fiat-collateralized** – Backed 1:1 by fiat reserves (e.g., USDT, USDC).

2. **Crypto-collateralized** – Overcollateralized with other cryptocurrencies (e.g., DAI).

3. **Algorithmic** – Uses smart contracts to control supply and demand (e.g., UST before its collapse).

Stablecoins combine the benefits of blockchain—speed, security, and transparency—with the stability of traditional assets. However, they face regulatory scrutiny and require trust in their issuers or underlying mechanisms.