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Mahima Thacker
Mahima Thacker

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馃 What are Stablecoins? Let's break it down!

1/ Stablecoins are like the anchors of the cryptocurrency world. Just as a boat uses an anchor to stay stable in the water, stablecoins keep their value steady, even when the crypto sea gets rough

2/ Why do we need Stablecoins?

Imagine if your $1 today could be worth 50$ tomorrow 鈥� that's how volatile some cryptocurrencies can be. Stablecoins solve this by pegging their value to something stable, like the US Dollar or gold

3/ Example Time:

Think of Stablecoins as gift cards. If you have a 馃挷50 gift card, its value doesn鈥檛 change even if the store runs a massive sale. Similarly, 1 USD stablecoin is always worth 馃挷1, regardless of the crypto market swings.

4/ Types of Stablecoins 馃憖 :

Fiat-backed: Like a piggy bank with $1 in cash for every $1 in Stablecoins鈥攁 guarantee your digital money is solid.

Crypto-backed: Like leaving extra collateral for a borrowed library book鈥攅xtra crypto ensures stability.

Algorithmic: Like a smart vending machine, adjusting supply to keep everything balanced.

5/ Hence, Stablecoins are like the superheroes of the crypto world鈥攖hey keep your digital money safe from wild swings, making sure it鈥檚 always worth what it鈥檚 supposed to be.

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