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What is a stablecoin?

A detailed comparison of stablecoins and how they work.

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Bitcoin and nearly all other cryptocurrencies are infamously volatile, capable of experiencing double-digit price swings in less than 24 hours. While this is an attractive feature for speculators looking to profit from price movements, it also remains one of the biggest barriers to the widespread adoption and legitimacy of cryptocurrency.

Enter stablecoins. These fixed-price digital currencies provide stability and a much wider range of everyday use cases than cryptocurrencies currently enjoy, and there are now more than 50 stablecoin projects being developed around the world.

Keep reading to find out how stablecoins work, the benefits they offer and why they’re important.

Disclaimer: This page is not financial advice or an endorsement of digital assets, providers or services. Digital assets are volatile and risky, and past performance is no guarantee of future results. Potential regulations or policies can affect their availability and services provided. Talk with a financial professional before making a decision. Finder or the author may own cryptocurrency discussed on this page.

What are stablecoins?

A stablecoin is a cryptocurrency with a fixed price. While the price of most cryptocurrencies is determined by supply and demand, stablecoins are designed to achieve a constant, stable price.

The most common method stablecoins use to achieve price stability is to peg the value of their coin to a real-world asset, for example gold or the US dollar. However, there are also a couple of other approaches for designing stablecoins, and we’ll explore all the options in detail a little further down the page.

Compare stablecoins side-by-side

Coin name Issued by Launched Type of stablecoin Features
AAA Reserve Arc Fiduciary Ltd 2017 Fiat backed Backed by cash, gilts and AAA-rated credit investments
AUDRamp (AUDR) OnRamp Technologies 2018 Fiat backed Backed by and pegged to AUD
A-Euro Augmint Not yet launched Crypto backed Pegged to EUR and backed by ETH
Bridgecoin (BRC) Sweetbridge Not yet launched Fiat backed To be backed by fiat, crypto, IPs, physical assets and more
Basis Basis Not yet launched Seigniorage shares Prices kept stable by algorithmically adjusting supply
BitUSD (BITUSD) BitShares 2014 Crypto backed Backed by BTS and pegged to USD
Boreal Aurora Not yet launched Crypto backed Backed by ETH and various cryptocurrencies
CarbonUSD Carbon Not yet launched Seigniorage shares Coin supply algorithmically adjusted based on demand. Pegged to USD
Digix Gold Token (DGX) Digix Global 2018 Fiat backed Backed by gold. Each token represents 1g of gold
Dai (DAI) MakerDAO 2017 Crypto backed Backed by ETH and pegged to USD
EURS STASIS Foundation 2018 Fiat backed Backed by and pegged to EUR
eUSD (EUSD) Havven 2018 Crypto backed Backed by ETH and pegged to USD
μFragments Fragments Not yet launched Seigniorage shares Pegged to USD. Supply inflates and deflates in response to demand
Gemini Dollar (GUSD) Gemini 2018 Fiat backed Backed by and pegged to USD
Globcoin (GLX) RCS 2019 Fiat backed Pegged to a basket of 15 fiat currencies and gold
HelloGold (GOLDX) HelloGold Sdn Bhd 2017 Fiat backed Backed by gold. Each token represents 1g of gold
kUSD (KUSD) Kowala Not yet launched Seigniorage shares Pegged to USD. Supply expands and contracts depending on market conditions
Monerium Monerium Not yet launched Fiat backed Backed by USD, EUR and other currencies
NOS (Nollar) NOS Not yet launched Fiat backed Backed by EUR, pegged to USD/other fiat currency
nUSD (NUSD) Havven Crypto backed Backed by nomins (Havven’s native currency) and pegged to USD
Paxos Standard (PAX) Paxos Trust Company 2018 Fiat backed Backed by and pegged to USD
Rockz Fiat backed Backed by CHF
Saga (SGA) Saga Foundation Not yet launched Fiat backed Pegged to the International Monetary Fund's special drawing rights (SDR), which is in turn tied to an underlying basket of currencies
StableUSD Stably Blockchain Labs Not yet launched Fiat backed Backed by and pegged to USD
Stronghold USD Stronghold 2018 Fiat backed Backed by and pegged to USD
SwissRealCoin SwissRealCoin 2018 Fiat backed Backed by a portfolio of Swiss commercial real estate
Tether (USDT) Tether 2014 Fiat backed Backed by and pegged to USD
TrueUSD (TUSD) TrueCoin LLC 2018 Fiat backed Backed by and pegged to USD
USD Coin (USDC) Circle 2018 Fiat backed Backed by and pegged to USD
USDVault Vault 2018 Fiat backed Backed by gold and pegged to USD
White Standard The White Company 2018 Fiat backed Pegged to USD
X8Currency X8 Currency 2018 Fiat backed Backed by eight fiat currencies and gold

How do stablecoins work?

How do stablecoin creators achieve the price stability they desire? There are three different types of stablecoins, each with its own approach for ensuring minimal price fluctuations.

Taxonomy of stablecoin types
A taxonomy of the main stablecoin types The State of Stablecoins, Blockchain.com

Why are stablecoins important?

While Satoshi Nakamoto’s vision for bitcoin was as a form of electronic cash, the world’s biggest cryptocurrency is rarely used as a medium of exchange on a day-to-day basis. Rather, its volatility and high fees mean that bitcoin is impractical for everyday transactions, and is instead used more as a store of value.

The same can be said for most other digital currencies. Because prices fluctuate significantly from one day to the next, holding and using crypto in the same way you do US dollars (getting paid a salary, paying for groceries, buying a coffee etc.) simply isn’t viable. Think about it why would a business accept bitcoin as payment when 1 BTC might be worth $10,000 today, but tomorrow its value could have dropped to $9,000?

And this is, in theory at least, where stablecoins offer a key advantage. Not only do they offer all the benefits of cryptocurrency, including cryptographic security and the ability to transfer value digitally, but they’re designed to have the low volatility for which fiat currency is famous. The end result is a digital currency that can theoretically be used as a daily medium of exchange in the real world.

Stablecoin uses

What can stablecoins be used for? A price-stable cryptocurrency could potentially have a wide range of purposes, including:

  • Medium of exchange. A successful stablecoin could be used as a medium of exchange for everyday spending in the same way we currently use US dollars.
  • Protection against market volatility. When the crypto market is experiencing a downturn, shifting your money out of traditional digital currencies and into a stablecoin can help hedge against market volatility. This can be particularly useful if you use a crypto exchange that doesn’t support fiat currency.
  • Financial products. Stablecoins could potentially form the basis for a new financial ecosystem, including everything from crypto-backed loans and global remittances to insurance, as they provide the long-term stability required for many financial functions.
  • Prediction markets. If you place a bet on the outcome of an event with a long time frame, using a stablecoin allows you to minimize the impact of market volatility.
  • Global access to a stable currency. In countries where the local currency is plagued by hyperinflation, holding a decentralized stablecoin could allow people to protect their wealth.

Compare crypto exchanges to buy stable coins

1 - 6 of 14
Name Product GXFCY Deposit methods Fiat currencies Cryptocurrencies Offer Disclaimer Go to site
OFFER
Uphold - Digital Asset Platform
Bank transfer, Credit card, Debit card, Bank transfer (SEPA), Apple Pay, Google Pay

27

252

Refer a friend to earn US$20 — $10 for you and $10 for the person you refer. T&Cs apply.
Terms apply. Cryptoassets are highly volatile. Your capital is at risk. Available in the US, CA, UK and AU
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OFFER
eToro USA LLC Cryptocurrency Trading
Bank transfer, Debit card, PayPal, Wire transfer

6

105

Get $15 when you sign up and deposit $100 in your eToro account. T&Cs apply.
Disclaimer: eToro USA LLC does not offer CFDs and makes no representation and assumes no liability as to the accuracy or completeness of the content of this publication, which has been prepared by our partner utilizing publicly available non-entity specific information about eToro. Your capital is at risk.
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EXCLUSIVE
Kraken Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card, Apple Pay, Google Pay, SWIFT, ACH online banking

6

261

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EXCLUSIVE
Gemini Cryptocurrency Exchange
Bank transfer (ACH), Cryptocurrency, Debit card, PayPal, Apple Pay, Google Pay, SWIFT

7

151

Get $15 in Bitcoin when you trade $100 with code Finder15
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Coinbase Digital Currency Exchange
Bank transfer (ACH), Debit card, PayPal, Wire transfer, Apple Pay, Google Pay

23

249

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Binance Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card, P2P

71

370

Not available for US citizens
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Whether products shown are available to you is subject to individual provider sole approval and discretion in accordance with the eligibility criteria and T&Cs on the provider website.

Name Product GXFCY Deposit methods Fiat currencies Cryptocurrencies Offer Disclaimer Go to site
eToro Cryptocurrency Trading
eToro Cryptocurrency Trading
Bank transfer, Credit card, Debit card, Neteller, Skrill

18

78

Disclaimer: Cryptoasset investing is highly volatile and unregulated in the UK and some EU countries. No consumer protection. Tax on profits may apply.
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Capital at risk

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Binance Cryptocurrency Exchange (Not available to US users)
Bank transfer, Cryptocurrency

1

369

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Capital at risk

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KuCoin Cryptocurrency Exchange
KuCoin Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card, PayPal, P2P

50

743

Not available for US citizens
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Capital at risk

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Bybit Cryptocurrency Exchange
Bybit Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card, P2P

73

279

Disclaimer: Highly volatile investment product. Your capital is at risk. Not available for US citizens
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Capital at risk

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Gate.io Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card

8

1607

Not available for US citizens
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Kraken Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card, Apple Pay, Google Pay, SWIFT

8

222

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Capital at risk

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Uphold
Uphold
Bank transfer (ACH), Credit card, Debit card, Apple Pay, Google Pay

27

237

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EXCLUSIVE
Paybis Cryptocurrency Exchange
Bank transfer, Credit card, Debit card, Neteller

42

357

Finder Exclusive: Get 25% discount on all commission for 1 transaction when using promocode Finder25. There is no time limit on the validity of the promo code.
US residents: Restricted in the following states - NY, CT, NM, WA, HI, AL, VT, FL, AK, NV.
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Finder Award
Bitstamp Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card, SEPA, Faster Payments (FPS)

3

96

Capital at risk

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Coinmama Cryptocurrency Marketplace
Credit card, Fedwire, SEPA, Google Pay, SWIFT, Bank card

6

15

Capital at risk

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EXCLUSIVE
Gemini Cryptocurrency Exchange
Bank transfer (ACH), Cryptocurrency, Debit card, PayPal, Apple Pay, Google Pay, SWIFT

7

151

Get $15 in Bitcoin when you trade $100 with code Finder15
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Capital at risk

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Finder Award
Crypto.com App
Bank transfer, Credit card, Cryptocurrency, Debit card, PayPal, Wire transfer, Apple Pay, Google Pay, SWIFT

31

378

Capital at risk

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Bybit Cryptocurrency Exchange

Bybit Cryptocurrency Exchange logo
  • Offers leverage and derivative trading
  • Supports EUR, GBP and CHF
  • Licensed to operate in all European countries
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Disclaimer: Highly volatile investment product. Your capital is at risk. Not available for US citizens

KuCoin Cryptocurrency Exchange

KuCoin Cryptocurrency Exchange logo
  • Buy, sell and trade over 700 crypto assets
  • Supports 10 Asian fiat currencies
  • Offers crypto futures trading
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Not available for US citizens

Kraken Cryptocurrency Exchange

Kraken Cryptocurrency Exchange logo
  • Buy, sell and trade over 200 crypto assets
  • Licensed to operate in 17 jurisdictions in Oceania
  • Supports AUD
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Binance Cryptocurrency Exchange (Not available to US users)

Binance Cryptocurrency Exchange (Not available to US users) logo
  • Supports over 300 crypto assets
  • Binance Pay enables users spend their crypto
  • Binance P2P supports multiple African fiat currencies
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Binance Cryptocurrency Exchange (Not available to US users)

Binance Cryptocurrency Exchange (Not available to US users) logo
  • Supports over 300 crypto assets
  • Binance Pay works with Credencial Payments to support crypto payments
  • Binance P2P supports five Latin American fiat currencies
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Bybit Cryptocurrency Exchange

Bybit Cryptocurrency Exchange logo
  • Supports leverage and derivative trading
  • Supports 300 spot trading pairs
  • Low-to-non-existent trading fees
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Disclaimer: Highly volatile investment product. Your capital is at risk. Not available for US citizens

Bottom line

There’s little doubt that a working, trusted stablecoin is a key stepping stone on cryptocurrency’s path to mainstream acceptance. However, this goal is still some way off.

There have been numerous examples in recent years of stablecoin projects that have simply failed to stand the test of time. Even Tether, the world’s largest (in terms of market cap) stablecoin and one that’s been around since 2015, has been plagued by accusations that it doesn’t have sufficient US dollar reserves to back up the amount of USDT in circulation.

In The State of Stablecoins, a report from wallet provider Blockchain released in September 2018, the authors summed up the current situation in the stablecoin market by saying:

“While there is a great deal of excitement surrounding stablecoins, the technology is still nascent and it is highly unlikely that the perfect stablecoin design exists at present; further experimentation (and innovation) is expected.”

While some stablecoins have been able to demonstrate short-term stability, only time will tell whether they’ve got the goods to provide long-term reliability. Until that happens, don’t assume that any cryptocurrency will be able to provide the same stability as good old-fashioned fiat currency. And if you’re thinking of putting any of your hard-earned cash into a stablecoin project, make sure you thoroughly research it first.

FAQs

Where can I buy stablecoins?

This depends on the coin you want to buy. While well-known stablecoins like Tether and Dai are listed on a wide range of cryptocurrency exchanges, many other coins are less widely available. Do your research to find out where you can buy your chosen currency.

How and where can I buy Tether?

You can find step-by-step instructions on this in our guide to how to buy USDT.

Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Picture: Shutterstock

Disclosure: At the time of writing the author holds ADA, ICX, IOTA, POWR and XLM.

Whether products shown are available to you is subject to individual provider sole approval and discretion in accordance with the eligibility criteria and T&Cs on the provider website.

Name Product GXFCY Deposit methods Fiat currencies Cryptocurrencies Offer Disclaimer Go to site
eToro Cryptocurrency Trading
eToro Cryptocurrency Trading
Bank transfer, Credit card, Debit card, Neteller, Skrill

18

78

Disclaimer: Cryptoasset investing is highly volatile and unregulated in the UK and some EU countries. No consumer protection. Tax on profits may apply.
Go to site

Capital at risk

View details
Binance Cryptocurrency Exchange (Not available to US users)
Bank transfer, Cryptocurrency

1

369

Go to site

Capital at risk

View details
KuCoin Cryptocurrency Exchange
KuCoin Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card, PayPal, P2P

50

743

Not available for US citizens
Go to site

Capital at risk

View details
Bybit Cryptocurrency Exchange
Bybit Cryptocurrency Exchange
Bank transfer, Credit card, Cryptocurrency, Debit card, P2P