Because market prices for many cryptocurrencies have fluctuated wildly in the past, using them to make purchases of everyday items can be difficult, since most of those are priced in fiat dollars (money issued by a government's central bank such as $US, or Euro) and they do not change much. Refunds can be tricky too for vendors of goods and services if they are priced with cryptocurrencies.
By the time a transaction settles, coins (cryptocurrency) can be worth significantly more or less than they were at the time they were sent, - Binance Academy
Related reading: What's the difference between a coin and a token?
Because of this, different tokens were needed to solve these types of problems. Stablecoins are tokens designed such that the volatility of their price is minimized, relative to some stable asset or basket of assets. They can be pegged to a cryptocurrency, fiat money, or to exchange-traded commodities (such as precious metals or industrial metals). Their use allows individuals to cheaply and rapidly transfer value around the globe while maintaining price stability.
Other use cases include providing liquidity, and hedging against volatility. It's notable that a stablecoin's market value can fluctuate, depending on supply, and on demand.
Examples of stablecoins include:
DAI: DAI is a token on the Ethereum blockchain that has a steady value of $1 US dollar, and is backed by other crypto assets
USDC: A token issued by regulated financial institutions, and backed by fully reserved assets, and redeemable on a 1:1 basis for US dollars
GUSD: Gemini Dollar is a stablecoin created by Gemini Exchange. It is pegged at a 1:1 ratio to the US dollar
Paxos: A token that is collateralized 1:1 with the US dollar (USD)
BUSD: A 1:1 US Dollar-backed stablecoin issued by Binance
Paxos Gold: A stablecoin backed by real gold reserves held by Paxos
Tether: Although Tether was originally pegged to $1 US dollar, it now supports four stablecoins: the U.S. dollar (USDT), the Chinese Yuan (CNHT) and the Euro (EURT), as well as a stablecoin backed by 1 oz. of gold (XAUT).
To learn about even more use cases for tokens, please stay tuned for my next article in this series.
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Resources:
https://academy.binance.com/en/articles/what-are-stablecoins
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