Stablecoins
Stablecoins are cryptocurrencies designed to keep a steady value, usually one US dollar. These guides explain how USDT and USDC work and how they differ. Learn who issues each coin, what its issuer says backs it, and why the network matters when you send one: the same stablecoin can exist on Ethereum, Tron and other blockchains. The topic also covers BUSD, whose issuer stopped creating new coins in 2023. A stablecoin can lose its peg, and it is not a bank deposit.
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What happens when a stablecoin winds down?
The issuer stops creating new coins, and holders redeem them or switch to another coin. BUSD is an example: Paxos stopped issuing new BUSD in February 2023.
Where are stablecoins used?
They are often used for trading and in decentralized finance, where they act as a steady unit of value. These guides explain how that works and how to hold stablecoins in a wallet.
Key terms
- Network Fees A network fee is the charge for processing a transaction on a blockchain, based on block space and demand, not on the amount sent.
- Confirmation A confirmation is the inclusion of a transaction in a block.
- Address A crypto address is a string of letters and numbers, like an account number, that identifies where coins should be sent on a specific blockchain.
- ERC-20 (Ethereum Request for Comments 20) ERC-20 is the technical standard most tokens on Ethereum follow, setting the functions every token must offer so wallets and apps can handle them alike.
- TRC-20 (TRON Token Standard) TRC-20 is the standard for fungible (interchangeable) tokens on the TRON blockchain, compatible with Ethereum's ERC-20.
Frequently asked questions
What is a stablecoin?
A stablecoin is a cryptocurrency designed to keep a steady value, usually one US dollar per coin. Many stablecoins, including USDT from Tether and USDC from Circle, try to do this by holding reserves that their issuers say match the coins in circulation.
Can a stablecoin lose its peg?
Yes. A stablecoin can trade below its target if people doubt its reserves or if its issuer runs into trouble. Its value depends on the issuer being able to redeem coins for dollars, and on people trusting that it will.
What is the difference between USDT and USDC?
Both aim to be worth one US dollar, but different companies issue them: Tether issues USDT and Circle issues USDC. Each company publishes its own reports on the reserves behind its coin, and each coin runs on its own set of blockchains. The USDT vs USDC guide in this topic compares them side by side.
Why does the network matter when I send a stablecoin?
The same stablecoin can exist on several blockchains. For example, Tether issues USDT on Ethereum, Tron and other networks. The sending and receiving wallets must use the same network, or the funds can be lost or hard to recover. Check the network as well as the address before you send.
Is a stablecoin the same as money in a bank?
No. A stablecoin is a crypto token, not a bank deposit. Its value depends on its issuer and the reserves behind it, and mistakes such as sending it to the wrong address usually cannot be reversed.