Stablecoin

A stablecoin is a cryptocurrency designed to hold a fixed value, almost always a peg of one United States dollar, either by backing each token with reserves or by algorithmic supply adjustment. Tether, the first widely used stablecoin, launched in 2014, and combined stablecoin supply grew to well over 100 billion dollars by the mid-2020s.

Why it matters

Stablecoins became the settlement rail of crypto markets and a source of dollar access in countries with weak currencies and capital controls. They also concentrate risk in their issuers: holders depend on the quality of the reserves and the issuer's willingness to redeem. The failure mode is severe. TerraUSD, an algorithmic design with no full reserve backing, collapsed in May 2022 and erased roughly 40 billion dollars of value across its ecosystem within days.

In the gold vs bitcoin debate

Stablecoins are the modern echo of gold-backed banknotes: a convenient claim circulating in place of the underlying asset, with all the issuer and reserve risk that structure implies. They extend the fiat dollar standard onto bitcoin-adjacent rails rather than competing with it. Tokenized gold products apply the same wrapper to metal. Bitcoin's counterargument is that it is the only major digital asset that is nobody's liability, stable in supply rather than in price.