- They are cryptocurrencies whose value is pegged, or tied, to that of another currency, commodity, or financial instrument.
- Stablecoins aim to provide an alternative to the high volatility of the most popular cryptocurrencies, including Bitcoin (BTC).
- Unlike cryptocurrencies like Bitcoin, stablecoins’ prices remain steady, in accordance with whichever fiat currency backs them.
- Eg: USDC stablecoin is backed by dollar-denominated assets.
- They are open, global, and accessible to anyone on the internet.
- They’re fast, cheap and secure to transmit.
What is Cryptocurrency?
- Cryptocurrencies are digital or virtual currencies in which encryption techniques are used to regulate the generation of their units and verify the transfer of funds.
- These currencies operate independently of a central bank.
- The economic transactions underlying cryptocurrency are decentralized, distributed and disbursed.
- The first and most famous cryptocurrency, bitcoin was introduced in 2009.
- Most cryptocurrencies are built on blockchain technology.
- Blockchain is a decentralized and distributed database on a peer-peer network which works on the basis of a consensus mechanism involving every node (computer) on the network.
- Blockchain is a peer-to-peer distributed network that records a public history of transactions without actually recording identities of the parties or the transaction details.
Q1) What is USDC?
USD Coin (USDC) is a digital currency that is fully backed by U.S. dollar assets. USDC is a tokenized U.S. dollar, with the value of one USDC coin pegged 1:1 to the value of one U.S. dollar. The value of USDC is designed to remain stable, making USDC a stablecoin.