What are stablecoins? Stablecoins are a type of cryptocurrency that is designed to minimize the volatility of the price. Unlike Bitcoin and other cryptocurrencies, which can fluctuate wildly in value, stablecoins are pegged to a stable asset, such as gold or the US dollar. This makes them an attractive option for those who want to use cryptocurrency for payment or investment but don’t want to deal with the volatility. There are a few different types of stablecoins, each with its own advantages and disadvantages. The most popular type is the USD-backed stablecoin, which is linked to the US dollar. This type is relatively stable, but it is subject to the fluctuations of the US dollar. Another popular type is the gold-backed stablecoin, which is linked to the price of gold. Gold-backed coins tend to be more volatile than USD-backed, but they offer a level of anonymity that USD-backed can’t match.
In the latest move to provide connection between fiat currency and cryptocurrency, Stripe is launching a new service to allow companies to pay users with stablecoins. Ryan Browne writes further for CNBC:
The $95 billion online payments company said Friday it will start offering merchants the ability to make payouts in crypto through the stablecoin USDC, which is issued by crypto firm Circle. Stablecoins are tokens that are pegged to fiat currencies to maintain a stable price. In USDC’s case, as the name suggests, the cryptocurrency is backed by the U.S. dollar.
Market volatility had caused Stripe to cease offering crypto support in early 2018, but new advancements in both the market and technology are providing new opportunity for Stripe to relaunch efforts to support Crypto, like stablecoins:
The firm has since warmed to crypto amid hype over “Web3,” a movement in tech that calls for the creation of a decentralized version of the internet based on blockchain technology. Stripe last year formed a team dedicated to exploring crypto and Web3.
The service will be launched initially for a limited number of creators and puts Stripe in line with many competitors that are beginning to launch crypto enabled solutions.
Overview by Jordan Hirschfield, Director of Research at Mercator Advisory Group
